Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

SCOTTISH TRANSPORT GROUP (OBAN QUAY) ORDER CONFIRMATION BILL

Read the Third time and passed.

Oral Answers to Questions — NATIONAL FINANCE

Inflation

Mr. Norman Lamont: asked the Chancellor of the Exchequer whether he is satisfied with the progress of his counter-inflation policies.

Mr. Rost: asked the Chancellor of the Exchequer whether he proposes any further measures in order to achieve his target of an inflation rate of 10 per cent. by the end of 1975.

Mr. Skinner: asked the Chancellor of the Exchequer whether he is satisfied with the progress of his policies for the control of inflation; and if he will make a statement.

The Paymaster-General (Mr. Edmund Dell): My right hon. Friend will take whatever steps he considers necessary, but it is imperative that the terms of the social contract on pay be adhered to.

Mr. Lamont: Is the Paymaster-General aware that many people who are deeply anxious about inflation find it very difficult to believe that the Government are taking the question seriously? Does the Paymaster-General agree with the forecast of the National Institute that inflation will be 25 per cent. next year? If he does not agree with that forecast, will

he say—as this is a matter on which there ought to be the maximum open public discussion—precisly why he does not agree?

Mr. Dell: I am aware that many people in the country are deeply anxious about the problem, and the Government certainly take the problem seriously. No Government have made forecasts of the rate of inflation. Therefore, I shall not comment on the National Institute forecast, except to say that there are many forecasts, which cover a range, and that so far most of the people in respect of whom settlements have been made have benefited from settlements within the social contract. But, of course, there are very important further settlements yet to be made.

Mr. Skinner: Does my right hon. Friend accept that it is not just a question of wages alone, if at all? There is the very important consideration of a £2,000 million trading deficit with our Common Market partners—so-called. Is not that the problem that is creating the hemming-in and is preventing our doing the things which we really want to do? Is it not imperative that we concern ourselves with introducing severe import controls? If our Common Market partners do not like it should we not tell them to lump it?

Mr. Dell: Unfortunately, our trading deficit has increased not merely with the EEC but with other parts of western Europe. The main danger in respect of inflation in this country at present— although, of course, there are other factors—lies in wage settlements. My hon. Friend should not ignore that.

Sir John Hall: Does not the Paymaster-General agree that the movement of world prices and the general trend of likely industrial and economic activity in 1975 give considerable support to the estimate that inflation will rise at a rate of 25 per cent. or even more next year? Does he not agree that this would be an intolerable development? Does he not further agree that, so far, the Chancellor has done nothing which is likely to change that situation in 1975? Cannot the Chancellor be prevailed upon to do something much more effective than what has been done so far?

Mr. Dell: My right hon. Friend cannot, unfortunately, affect the level of commodity prices next year—that is one important factor in the situation—but I emphasise that as things are now the most important factor is the level of wage settlements. That is why I emphasise the importance of adherence to the social contract.

Mr. Stanley: asked the Chancellor of the Exchequer what has been the rate of inflation over the last three months expressed on an annual basis.

Mr. Pardoe: asked the Chancellor of the Exchequer what has been the increase in retail prices over the last three months for which figures are available expressed at an annual rate.

The Chief Secretary to the Treasury (Mr. Joel Barnett): The increase in the rate of inflation over the three months to October expressed at an annual rate is 13·4 per cent.

Mr. Stanley: Does the Minister not agree that when the Chancellor of the Exchequer made his prediction on 24th September that inflation next year would be down almost to 10 per cent. he was basing it on the successful working of the social contract? Will the Minister now acknowledge, after nearly nine months' working of the social contract that it has conspicuously failed to bring down inflation to an aceptable rate, there and that if it continues at its present rate will be mounting unemployment, a flight from sterling and a decline in real living standards next year?

Mr. Bamett: I do not agree with the hon. Gentleman's gloomy prognostications. The majority of settlements in the past nine months have been inside the social contract.

Mr. William Hamilton: Will my hon. Friend keep on repeating that if we do not get on top of inflation there must be substantially increased unemployment? As we are committed to maintaining at all costs an acceptable rate of employment, will my hon. Friend keep on explaining the problem to those who do not seem to understand it?

Mr. Barnett: I agree with my hon. Friend. The Government are well aware of the problem. We are seeking to get

on top of it and to ensure that there is not unemployment at the levels that some hon. Members seem to relish.

Mr. Robert Carr: Will the Minister explain why the rate of inflation has risen from the 8·4 per cent. of which the Chancellor boasted in the election to the current 13·4 per cent., and say whether the Government do or do not maintain the Chancellor's public forecasts that it will be down to 10 per cent. by the end of next year? If not, why not? Does the hon. Gentleman realise that if the Government would do as his hon. Friend the Member for Fife, Central (Mr. Hamilton) has just asked, and treat the matter more seriously, putting their weight behind the social contract, all of us in the House would give the Government their support?

Mr. Barnett: I find that hard to take from the right hon. Gentleman, who has not exactly been behind the social contract. He has done nothing but denigrate it from the beginning. The 8·4 per cent. has never been denied. The Price Commission gave figures that were very similar.

£ Sterling (Value)

Mr. McCrindle: asked the Chancellor of the Exchequer what is the value of the pound at the latest date for which figures are available assuming it to be 100p on 18th June 1970 and 28th February 1974, respectively.

The Minister of State, Treasury (Mr. Robert Sheldon): Sixty-four and a half pence and 90p respectively. These estimates are based on movements in the General Index of Retail Prices between June 1970 and October 1974 and between February 1974 and October 1974.

Mr. McCrindle: Does the Minister recall the days of 1972 and 1973 when his hon. Friends were berating the then Conservative Government over the fall in the value of the pound and promising better things to come? In the light of the figures that the Minister has just supplied, may I ask whether there has been a change of heart or a change of policy on the part of the Government? If not, when we can expect the things that we were promised in 1972 and 1973?

Mr. Sheldon: Unfortunately, the decline in the value of the pound is not something which has happened just over the last few months; it has been a continuing factor which has bedevilled British economic policy for many years. The Government are determined to take action at least to reverse that particular situation.

Mr. McCrindle: What action?

Mr. Ridley: Does not the Minister agree that the level of the borrowing requirement has a direct correlation with the subsequent rate of inflation? In that case, is not the Government's policy in planning for a borrowing requirement of £6,300 million to say the least negligent, and, to say the worst, trying to destroy the British economy?

Mr. Sheldon: The hon. Gentleman is quite right when he says that the borrowing requirement is high, and this is accepted by the Government. But the important thing in this connection is the way in which it is being financed. The way in which it has been financed will at any rate, I should have thought, give some consolation to the hon. Gentleman that it is not causing the large increase in the money supply which we saw on previous occasions.

Travelling Expenses

Mr. Gwilym Roberts: asked the Chancellor of the Exchequer if he will take steps to make travelling expenses to and from work by office and industrial workers allowable expenses for taxation purposes.

Sir A. Meyer: asked the Chancellor of the Exchequer whether he will now permit travel to work expenses to be set against an individual's liabilities to income tax.

Mr. Joel Barnett: I do not think it would be right to single out this particular form of personal expenditure for tax relief.

Mr. Roberts: Does my hon. Friend accept that the increasing costs of travel are putting the ordinary shop floor worker at a growing disadvantage as compared to the director, the executive or people in this place who often find their costs covered by the company or the organisation concerned? Does he recognise that in

areas like Cannock Chase, which border major conurbations, this increasing cost of travel is now acting as a positive disincentive to people to make the journey, and that this cost factor will be a weapon of unemployment if nothing is done?

Mr. Barnett: I am aware of the increasing problem of higher costs. Directors and Members of Parliament are taxed on the private benefit of car expenses, and that would include travel from home to work.

Sir A. Meyer: Is the hon. Gentleman aware that this problem is particularly acute in areas of low economic activity, particularly in rural areas? Does he realise that if there are further increases in the cost of fuel, as seems all too probable, the point will shortly be reached at which the average wage in such areas simply will not cover the cost of travel to work, and then the effect of unemployment will be very severe?

Mr. Barnett: I am aware of the problem, but it does not apply only to rural areas and I do not think that it would be fair for the general body of taxpayers to give a subsidy in this respect.

Mr. Grocott: The housing problems of the conurbations will be solved only if people are prepared to move out to new housing areas outside the conurbations. Is my hon. Friend aware that one positive disincentive to their doing that is increasing travel costs and the increasing costs of private motoring? Does he agree that a proper tax incentive system covering people's journeys to work would encourage public transport, and not private transport, and could be a very worthwhile social objective?

Mr. Barnett: My hon. Friend has raised a very good point, but I do not believe that tax relief of this kind is the best way to help. If it were done in this way it would be necessary to look at the tax assessments of about 20 million taxpayers, which would involve an enormous administrative problem.

Mr. Spicer: If the Minister does not believe that tax relief is the right way to help people, particularly in rural areas, how does he suggest this should be done?

Mr. Barnett: There are many other ways in which one can help. One is to


see that we have a decent public transport system, and that is our objective.

Mr. Robert Carr: By putting up the price of petrol via the VAT mechanism are not the Government putting the whole burden of the higher price on the private motorist and no burden on the business motorist?

Mr. Barnett: I am interested to hear the right hon. Gentleman's question. I assume, therefore, that he would rather increase the burden of industrial costs and affect exports. I would have thought that he would welcome the way that we made this increase through the VAT system.

Balance of Payments (EEC Countries)

Mr. Hurd: asked the Chancellor of the Exchequer what assumptions are made of likely trends in the United Kingdom's balance of payments with other members of the EEC in the general balance of payments forecasts published in his latest Red Book.

Mr. Joel Barnett: The forecasts attempt to allow for developments in the balance of trade in goods and services with all other countries. But it is not the practice to publish further details beyond those provided in Table 1 of the Financial Statement and Budget Report.

Mr. Hard: Since there appears to be some confusion on this issue below the Gangway will the Chief Secretary confirm that if importers switch to buying such things as cereal products from European suppliers because they are now cheaper the result will probably be an increase in our deficit with the EEC, but that that will be of benefit to the balance of payments as a whole?

Mr. Barnett: What the hon. Gentleman said simply emphasises the difficulties of trying to make assumptions on a particular figure or figures.

Mr. Ronald Atkins: Will my hon. Friend put pressure on the Secretary of State for Defence to arrange an offset agreement with Germany to reduce the £200 million-£300 million deficit which we have in the balance of payments with that country because of running the British Army of the Rhine?

Mr. Barnett: There is, of course, already an offset agreement, but I shall naturally bear in mind what my hon. Friend said and bring it to the attention of my right hon. Friend the Chancellor.

Mr. Marten: Is the Chief Secretary aware that the latest figure shows that 96 per cent. of our non-oil trade deficit is with the EEC? What are the Government going to do about that?

Mr. Barnett: As I pointed out, there is great difficulty in extracting figures in that way. Our balance of trade with the EEC has been deteriorating substantially since well before our entry—as, regrettably, it has been doing with many other areas of the world. I must therefore ask the hon. Gentleman not to make this kind of assumption.

Value Added Tax

Mr. Brittan: asked the Chancellor of the Exchequer whether he will take steps to relieve those living in rural areas from the effects of the increase in VAT on petrol.

Mr. Robert Sheldon: It would not be practicable to provide the type of relief which the hon. Member has in mind.

Mr. Brittan: Does the Minister of State accept that for those living in country areas ownership of a car is not just a luxury but is often the only way of getting to work, seeing friends or engaging in the slightest social or communal activity? Will he not at least consider providing petrol vouchers for those living in the most isolated areas which would enable them to buy petrol at slightly less than the present prohibitive cost?

Mr. Sheldon: I understand fully the hon. Member's point, but there are serious practical difficulties in moving in the direction that he has in mind. There are problems of definition and discrimination of one kind or another which make it almost impossible for this to be considered as a solution.

Mr. Gould: Does the Minister of State accept that while the reasons for the increase in VAT on petrol are widely understood and accepted, there are some people who have been particularly hard hit by that increase, namely, disabled people who have to drive themselves to work and for whom the cost of petrol


forms a high proportion of the small sums they are able to earn? Will he consider some form of relief for that group?

Mr. Sheldon: My hon. Friend has made an important and valid point. This is something which I shall draw to the attention of my right hon. Friend the Secretary of State for Energy.

Mr. Gwynfor Evans: Is the Minister of State aware that in Welsh rural constituencies as many as 40 per cent. of the working population have to travel considerable distances to work by car because of the almost total absence of public transport? Is he aware that these people have the lowest level of income in the United Kingdom? This oppressive cost of petrol is bound to aggravate the problem of rural depopulation.

Mr. Sheldon: I fully understand the hon. Gentleman's important point, but I must return to the very real difficulties of definition of rural areas, of the marginal situation between rural and suburban areas, and the question of subsidies for essential and non-essential users. Many people in rural areas do not use petrol always for essential purposes. This is something the House must understand.

Mr. Raphael Tuck: My hon. Friend has referred the question of the disabled driver to my right hon. Friend the Secretary of State for Energy, but is he aware that we have been to see the Secretary of State for Energy and that he has been able to offer us no relief? To stop this continual buck-passing, will the Minister of State offer some solution?

Mr. Sheldon: This is obviously a matter for both the Department of Energy and my right hon. Friend the Secretary of State for Social Services. The only thing that can usefully be said is that in this context there is possible scope for amelioration, and I shall take the matter up in consultations with both my right hon. Friends.

Mr. Dodsworth: asked the Chancellor of the Exchequer what is the outcome of his consideration of proposals for zero rating VAT on bloodstock; and if he will make a statement.

Mr. Robert Sheldon: These proposals are still under consideration.

Mr. Dodsworth: I thank the Minister for the continued consideration of the proposals, but is he aware that the matter is causing acute concern to those in the bloodstock industry? There is excessive competition in France and Ireland because of the advantageous VAT arrangements in those countries, and we shall sec the destruction of the bloodstock lines in this country if we do not make rapid changes in the legislation.

Mr. Sheldon: The Government understand the problems of the bloodstock industry. That is why the negotiations are taking place.

Mr. Hugh Fraser: I thank the Minister for his apparently sympathetic reply, but I reinforce what my hon. Friend the Member for Hertfordshire, South-West (Mr. Dodsworth) said. Will the Minister look at the correspondence I have sent to the Chancellor of the Duchy of Lancaster about the devastating effect the tax could have on the standard of British racing unless something is done?

Mr. Sheldon: The Government are waiting for the original bloodstock VAT committee to be reformed. Our waiting for its reformation, so that it can make representations covering the whole industry, is contributing largely to the delay.

Mr. Spriggs: asked the Chancellor of the Exchequer how many written representations have been made to him by retail and dispensing chemists, and the pharmaceutical industry in particular, about his plans for additional rates of VAT on the retail pharmacists; and whether he has considered their problems where calculation of VAT liability at more than two rates becomes impossible.

Mr. Joel Barnett: I have received over 430 written representations from or about retail pharmacists concerning the possible introduction of additional rates of VAT. Customs and Excise are studying, in consultation with the representative trade bodies, the problems that would arise, but I should stress that no decisions in this matter have yet been taken.

Mr. Spriggs: I thank my hon. Friend for that reply. Will he look at this question from a reasonable point of view and ensure that before final decisions are taken no action will be taken by his


Department that will bring VAT into disrepute?

Mr. Barnett: I always like to be reasonable, particularly to my hon. Friend. I assure him, as I said in my original answer, that no decisions on this matter have yet been taken.

Mr. Fairgrieve: Does the hon. Gentleman appreciate that one of the main reasons for the change to VAT was that it would be a tax which could be at one rate, and that we are in serious danger of getting back to the stupidities of the previous purchase tax?

Mr. Barnett: I know that the Opposition when in Government announced that it was to be a broad-based, comprehensive and simple tax, but I am not sure whether anybody really believed them.

Mr. Robert Carr: The tax may not be wholly simple, but does not the hon. Gentleman admit that it would be two or three times more complicated if the Government were foolish enough to introduce a multi-rate system? Will he take note that the Opposition would oppose such a change with all the power at our command?

Mr. Barnett: I am not too surprised about what the right hon. Gentleman cares to oppose.

Capital Gains Tax

Mr. Lane: asked the Chancellor of the Exchequer whether he is satisfied with the operation of the capital gains tax as it affects householders; and if he will make a statement.

Mr. Joel Barnett: I assume that the hon. Member is concerned about the liability to capital gains tax that may be incurred by a householder who lets part of his home. Complete exemption from capital gains tax for the residential owner occupier extends only to a house which is wholly owner-occupied. It was never the intention that it should extend to parts of the house not used by the owner as his home.

Mr. Lane: Will the Minister take a fresh look at the serious situation in Cambridge and other university towns where householders are increasingly hesitant about letting the odd room or two for lodgings because of the capital

gains tax problem, coupled with uncertainty resulting from the Rent Act 1974? Should not it be within the wit of the Treasury to find a commonsense solution that will increase the supply of badly-needed lodgings without breaching the principle of the capital gains tax?

Mr. Barnett: I am aware of the problems of students in Cambridge and elsewhere, but I should be surprised if capital gains tax were the major problem for landlords and landladies.

Mr. Evelyn King: Aside from the problems of householders, is it not a fact that in the existing disastrous economic climate there are likely to be more capital losses than capital gains? Is not this the right moment to abolish the tax?

Mr. Barnett: No, Sir.

Investment Finance

Mr. Leslie Huckfield: asked the Chancellor of the Exchequer whether he will now make a further statement about his plans for expanding medium-term investment finance.

Mr. Dell: Finance for Industry is expected to engage in its expanded activities very quickly. I understand that the company is already dealing with inquiries from potential customers.

Mr. Huckfield: Is my right hon. Friend aware that the result of the last relaxation of credit facilities in 1971 is that the Bank of England is now spending over £1,300 million propping up property companies and fringe banks? How will my right hon. Friend make sure that the Finance for Industry medium-term capital which will now be available on easier terms will go towards the kind of investment and structural reform that the economy demands?

Mr. Dell: Finance for Industry will have discretion as to where it lends its money, and it will consider projects put up to it by companies in industry.

Mr. Hordern: Is the Minister aware that any funds provided for Finance for Industry must necessarily come from existing institutions, from funds that they would otherwise have invested in Government securities? Therefore, is he aware that any funds so provided for Finance for Industry will be at a cost


to the Government's own borrowing requirement? Where will the Government get their money?

Mr. Dell: That is not necessarily the case. The Government are doing a great deal of borrowing abroad. There is no evidence, as far as I know, that satisfying the Government's borrowing requirement and helping investment through Finance for Industry will be in conflict.

2½p Coin

Mr. Lipton: asked the Chancellor of the Exchequer what plans he has to withdraw the 2½p coin from circulation.

Mr. Robert Sheldon: The position is being kept under review. No decision is likely in the immediate future.

Mr. Lipton: It has been under review for a long time. When will the Government make up their mind to phase out this obsolete relic of the predecimal coinage? Is my hon. Friend aware that if the coins are withdrawn from circulation the Government will make a vast profit, because most of them will not be surrendered but will be used for making trinkets, bracelets, and that sort of thing?

Mr. Sheldon: I am interested in my hon. Friend's suggestions for the Government to make large profits. The coin has a useful, though limited, rôle still to play. Obviously, the matter will be reconsidered, but in various surveys people have made known their preference for the continuation of the coin. As long as that remains the case the Government intend to keep the coin in existence.

Mr. Tebbit: How long will it be, at the present rate of inflation, before the hon. Gentleman has to withdraw the 5p coin, as being of no use in our commercial transactions?

Mr. Sheldon: The hon. Gentleman is mistaken. It is a useful coin. It is used considerably, as is all the other coinage, and will continue to be in use.

Education (Parental Contribution)

Mr. Fletcher-Cooke: asked the Chancellor of the Exchequer why parents who are obliged to contribute to the further education of their married daughter cannot write off this expense for income tax purposes.

Mr. Robert Sheldon: So long as a daughter over 16 is receiving full-time education at a university, college, school, or other educational establishment, the parent is entitled to claim the income tax child allowance of £305, whether she is married or not. This allowance is intended broadly to take account of a child's financial dependence or her parents so long as she is undergoing full-time education.

Mr. Fletcher-Cooke: Is the Minister aware that that by no means compensates the father of a married daughter in those circumstances for the amount of grant that he is forced to pay on the purely artificial assumption that the daughter is still dependent upon him?

Mr. Sheldon: The hon. Gentleman is under a misapprehension. No parent is forced to pay in that way. There is no obligation upon a parent by law to contribute. Deductions are made from grants to allow for parental contributions.

Mr. Woodall: Does what my hon. Friend said about daughters over the age of 16 apply to unmarried daughters over the age of 21?

Mr. Sheldon: Yes, Sir. A recent decision by the Court of Appeal showed that that was so.

Mrs. Thatcher: I wish to ask only one thing. Will the hon. Gentleman make clear that there is a moral obligation on the parent to find that contribution towards a university grant because he is means-tested on that basis? I would not like any impression to be left that the hon. Gentleman felt that there was no obligation to do so and that therefore the tax consequences followed.

Mr. Sheldon: I would not suggest that a moral obligation and an obligation for financial purposes are the same thing.

Development Land Tax

Mr. Michael Latham: asked the Chancellor of the Exchequer whether he will make a detailed statement on the proposed development land tax.

Mr. Robert Sheldon: I would refer the hon. Gentleman to the reply given on 13 th November by my right hon. Friend the Paymaster-General to a Question by


my hon. Friend the Member for Rother Valley (Mr. Hardy).—[Vol. 881, c. 149.]

Mr. Latham: Has the hon. Gentleman any conception of the total paralysis that the lack of such a statement is causing in the housing market?

Mr. Sheldon: Without conceding the point made by the hon. Gentleman, I am aware that the sooner this position is clarified the better, and a statement will be made as soon as possible.

Mr. Grylls: Will the Government tell the House whether this new tax will result in more or fewer new houses being built?

Mr. Sheldon: The whole question of development land tax will come before the House and the hon. Gentleman will find that our proposals will improve the supply of land for houses, with the benefit to be obtained by the community in general. He must, regretfully, take on a little more patience and wait until the statement is made, as it will be shortly.

Overseas Borrowing

Mr. Ridley: asked the Chancellor of the Exchequer what guarantees he has given of repayment terms of overseas borrowings; and for what amounts.

Mr. Dell: The total of overseas borrowings under Treasury guarantee since March 1974 is £680 million, at the rates of exchange at the dates of the borrowings. With permission, I shall circulate details of the amounts raised by individual borrowers in the OFFICIAL REPORT.

Mr. Ridley: Does not the recent Aramco affair show that people will increasingly demand repayment in dollars of our overseas borrowings? Are the Government aware that this will place a shackle on our future, which we may never be able to discard in view of the impending weight of debt which the Government must incur? Will the right hon. Gentleman therefore take steps to reduce our dependence on overseas borrowing and give an assurance that he will seek to do all possible to borrow free from guarantee of any dollar repayment terms?

Mr. Dell: We shall do what we can to reduce the amount which this country has to borrow. To try to cover the balance of payments deficit in the short term would have serious results. The

foreign exchange markets reacted in too alarmist a way to reports about the currency in which payment for oil is to be made to Saudi Arabia. It is not the currency of payment so much as the investment policies of the Government concerned that we must consider. It would be quite wrong to conclude from reports of changes in arrangements with the oil companies operating in Saudi Arabia that the producing Governments have changed their investment intentions.

Mr. Skinner: Does my right hon. Friend accept that one of the reasons why there is a great deal of despair in the international trading market at present, especially with regard to the £ sterling, is that it can be seen not only that we are to some extent mortgaging our North Sea oil, but also that, according to the latest communiqué from Brussels, even that amount of our oil which is not already mortgaged will go into the hands of the Common Market partners?

Mr. Dell: There is no question of mortgaging our North Sea oil. It will remain under the entire control of the British Government.

Following is the information:

Sterling equivalent of amounts borrowed at the dates of borrowings (£ million)


British Steel Corporation
188·2


Electricity Council
41·7


National Coal Board
18·7


National Water Council
173·2


North of Scotland Hydro Electric Board
6·2


Post Office
208·9


South of Scotland Electricity Board
43·1

Regional Employment

Mr. Radice: asked the Chancellor of the Exchequer to what extent in his Budget proposals he took account of regional employment trends.

Mr. Joel Barnett: Regional employment was one of many important considerations taken into account in framing the proposals in my right hon. Friend's two Budgets this year, and in the 22nd July measures.

Mr. Radice: Does my hon. Friend accept that despite all that the Government have done, unemployment in the development areas, particularly in the Northern Region, remains unacceptably high? Will he give an undertaking that if the situation in development areas worsens the Government will take appropriate action?

Mr. Barnett: Of course the level of unemployment is wholly unsatisfactory in the Northern Region. I entirely accept that. We stand ready to take any other measures that will be necessary.

Mr. Wigley: Is the hon. Gentleman aware that in the time of both the present Government and the previous Government one problem has been that industries attracted to development areas have tended to be factory-floor industries, and branch factories? Will the hon. Gentleman consider bringing to his right hon. Friend's attention the possibility of introducing a dual rate of corporation tax, as recommended by the Welsh Council two years ago, to encourage companies to move their head offices lock, stock and barrel into development areas?

Mr. Barnett: I am always prepared to consider anything that anybody puts to me, but I am not sure that what the hon. Gentleman suggests would be the best way to help the regions.

Mr. Lawson: On the subject of unemployment, whether it be in the Northern Region or anywhere else in the United Kingdom, will the hon. Gentleman now withdraw the disgraceful remark he made a little time ago, to the effect that many hon. Members on the Opposition side of the House relish increased unemployment? Does he not agree that it would be equally bad if Opposition Members were to say that the hon. Gentleman and his hon. Friends relish increased inflation?

Mr. Barnett: The answer to both of those points is "No, Sir."

Mr. Duffy: Is my hon. Friend aware that, despite the measures taken by my right hon. Friend the Chancellor of the Exchequer, redundancies are now beginning to appear in the Yorkshire Region, notably in the Sheffield area, which, as my hon. Friend knows, is an intermediate

area? Will he watch the position very closely?

Mr. Barnett: Yes, Sir.

Overseas Debt

Mr. Hordern: asked the Chancellor of the Exchequer if he will give the total of overseas debt outstanding at the latest convenient date.

Mr. Dell: Government foreign currency debt outstanding at the end of November was $4,811 million—roughly £2,000 million at current exchange rates. Other public sector foreign currency debt was $5,284 million—roughly £2,500 million.

Mr. Hordern: Will the right hon. Gentleman say what so-called interest payments are due on this enormous burden of debt which we now have to pay, and how this is affected by the fact that sterling today stands at its lowest rate ever?

Mr. Dell: There is a large interest payment outstanding on this amount as all hon. Members in the House will realise, but I am afraid that I do not have the exact figure. The House must realise that the foreign borrowing programme was begun by the Conservative Government for reasons that they regarded as good, and that we are having to continue it in view of the current large balance of payments deficit. It is our intention to reduce it as rapidly as we can, but in the immediate future we shall have to continue borrowing.

Mr. Jay: Can my right hon. Friend say what proportion of this capital sum was borrowed by the Government who were in office before March this year?

Mr. Dell: I do not have that figure with me, but clearly it was a considerable amount, the foreign borrowing programme having begun under the Conservative Government.

Expenditure

Mr. Tim Renton: asked the Chancellor of the Exchequer whether he still adheres to the figure of 1·5 per cent. as the average rate of public expenditure expansion given in the Supplementary Financial Statement and Budget Report.

Mr. Joel Barnett: Yes, Sir. The figure refers to expenditure on goods and


services only in the period up to the first half of 1975. The Government's plans for public expenditure as a whole, including transfer payments, will be published in a White Paper early next year.

Mr. Renton: Is there not a danger that because of the profligacy of the Secretary of State for Industry public expenditure will expand at a far greater rate? Will the Chief Secretary make it his aim to achieve not just cuts in defence but a cut in total public expenditure in real terms, which is what the country needs?

Mr. Barnett: The Chancellor made clear in his Budget Statement that over the next four years the growth in public expenditure in demand terms will be, on average, 2¾ per cent. a year.

Mr. Gwilym Roberts: Will my hon. Friend accept that the great majority of Labour Members believe that there should be considerable increases in public expenditure, apart from defence, and that we further believe that this additional expenditure should be paid for by increased taxation of the wealthy and the higher income groups?

Mr. Barnett: In different economic circumstances I would entirely agree with my hon. Friend. At present I am afraid it just is not possible.

Mr. Alison: Can the Chief Secretary now say, in relation to the figure of 1·5 per cent. growth referred to in the Question put by my hon. Friend the Member for Mid-Sussex (Mr. Renton) and the average figure of 2·75 per cent. growth to which he himself referred, when we are to move up in terms of expenditure in real terms to that much higher rate of expenditure implied by the longer-term average?

Mr. Barnett: I understand that the hon. Gentleman has another, even more complicated, Question later on the Order Paper.

Borrowing

Mr. Gow: asked the Chancellor of the Exchequer from which sources, and at what rates of interest, he is proposing to borrow the sum of £6,300 million, being the amount of the public sector borrowing requirement to which he referred in his Budget Statement.

Mr. Dell: A large part of the requirement for the current financial year has already materialised and has been financed by borrowing from the general public and from overseas residents. My right hon. Friend sees no reason why the requirement should not continue to be financed to a large extent from those sources. The borrowing has been, and will be, at a range of interest rates reflecting the great variety of market instruments.

Mr. Gow: Will the Paymaster-General accept that the judgment which the Chancellor gave in his March Budget about the borrowing requirement, which was wise then, from the point of view of the Government, is not right today? Does he not agree that the borrowing requirement announced in the Chancellor's Statement last month is an indication that the Government are still arranging for the British people to live far beyond their means?

Mr. Dell: The Government are not arranging for the British people to live far beyond their means. It is part of the object of the social contract policy to make sure that standards of living do not rise over the next year. In any case, as the hon. Gentleman will be aware, when we are running a balance of payments deficit of the order that it is currently, either there is a very large public sector borrowing requirement or the company sector is in even greater deficit than is now the case. That would have a serious effect on employment and investment.

Mr. Sedgemore: Will my right hon. Friend give an assurance that the Treasury will co-operate to the full in the inquiry which the Public Expenditure Committee intends to make into the financing of this borrowing?

Mr. Dell: I have yet to hear about this inquiry. Perhaps I should study what it is before I commit myself.

Mr. Biffen: Does not the shaky state of sterling suggest that many people believe that overseas residents will not be such willing lenders as, perhaps, the Government have foreseen? In these circumstances, rather than that we should be bundled into yet another crisis by a flight from sterling should not the Government be announcing a stabilisation


programme of increased domestic taxation?

Mr. Dell: I have already made a statement in answer to the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) about recent events in the exchange market. I have nothing further to add to that.

Mr. Tomlinson: Does my right hon. Friend agree that when we are increasing public expenditure it is preferable to increase taxation to finance such expenditure rather than to increase the public borrowing requirement, as happened in the Budget this year?

Mr. Dell: I note my hon. Friend's view. He will appreciate that so to do has other effects, often undesirable. One such effect could be on the rate of inflation.

Mr. Aitken: How does the right hon. Gentleman reconcile the answer he has just given to my hon. Friend the Member for Eastbourne (Mr. Gow) with his statement a few moments ago that it was Government policy to reduce overseas borrowing?

Mr. Dell: I do not think there is any difficulty. I said that while we had a balance of payments deficit of this order we could not reduce overseas borrowing. We wish to reduce that balance of payments deficit as rapidly as we can and in that way reduce the amount of our overseas borrowing.

INDUSTRIAL POLICY (MINISTER'S SPEECH)

Ql. Mr. Norman Lamont: asked the Prime Minister whether the public speech of the Secretary of State for Industry in London on industrial policy on 27th November represents Government policy.

The Lord President of the Council and Leader of the House of Commons (Mr. Edward Short): The Prime Minister is suffering from a minor viral infection and has been advised to cancel all his engagements for the next three days. I have been asked to reply.

Yes, Sir.

Mr. Lamont: In view of some of the wilder statements made by the Secretary of State for Industry, may I ask the

Leader of the House whether he is aware that there will be a certain relief, not perhaps shared by all Labour Members, that the Government have chosen to appoint as an industrial adviser someone as hard-headed and as experienced as Sir Don Ryder? In view of the apparent disagreement between the Prime Minister and the Secretary of State for Industry, will the Leader of the House say to whom Sir Don is ultimately responsible? Is it the Prime Minister or the Secretary of State?

Mr. Short: Sir Don Ryder is responsible to the Government. There is no dispute of any kind between my right hon. Friend and the Prime Minister— none whatever, as the hon. Gentleman will see when the Industry Bill is published in the near future.

EUROPEAN ECONOMIC COMMUNITY (MINISTER'S SPEECH)

Mr. Tebbit: asked the Prime Minister if the public speech of the Secretary of State for Trade in London on 26th November 1974 on EEC questions represents Government policy.

Mr. Edward Short: I have been asked to reply.

Yes, Sir.

Mr. Tebbit: May I give the right hon. Gentleman an easy question today? Will he tell the House whether there is agreement between the Secretary of State for Trade and the Prime Minister whether the question to be put on the EEC referendum ballot paper is to be decided in this House or down the road at a Labour Party conference? Which is it to be?

Mr. Short: All of the hon. Gentleman's questions are easy. The questions in the referendum—if there is to be a referendum—will be in the legislation which will have to be passed by this House.

Mr. Jay: Is my right hon. Friend aware that a summit conference of the EEC has been held this week? Since the official communiqué from that conference says that the Government have gone far, first, to surrender the right to the veto in EEC decisions and, secondly, to agree to direct elections to the EEC Parliament by 1978,


and as neither of these is consistent with the Government's election pledges, are we at least to have a statement today on that summit conference?

Mr. Short: My right hon. Friend is quite wrong. If he reads the document carefully he will see that the Prime Minister reserved our position on all the points on which we are renegotiating.

Sir David Renton: Will the right hon. Gentleman ask the Prime Minister to consider having a referendum on the question whether there should be a referendum on the EEC?

Mr. Short: I regret that 1 did not point out to my right hon. Friend the Member for Battersea, North (Mr. Jay) that the Prime Minister hopes to make a statement in the House on Monday on the summit conference.

Mr. Skinner: Is my right hon. Friend aware that in his speech the Secretary of State for Trade referred to the massive tenfold increase in our trading deficit with the rest of the Common Market since our entry? Since we as a party went united into the Lobby against the tariff reductions in the import levies that commenced on 1st January 1974, will my right hon. Friend ask all of our comrades to go into the same Lobby again to defeat the reductions on 1st January 1975?

Mr. Short: There is an accrued trade gap with the EEC countries, but our exports to all eight countries have improved considerably since 1972 and continue to do so. There is another factor—our considerable invisible export trade with Europe. We have no particulars about that, but it is nevertheless so.

Mr. Heath: The Lord President's statement on trade with the EEC is accurate. Will he not go further and say that the allegations made by his right hon. Friend the Secretary of State for Trade, which have been repeated in somewhat different form by his hon. Friend the Member for Bolsover (Mr. Skinner), are in no way substantiated by the analysis of Department of Trade statisticians which appeared in the departmental publication Trade and Industry at the end of October? Does that not show that all the statements made by the Secretary of State for Trade are completely unjustified?
We sympathise, of course, with the Prime Minister in his illness, and understand why he cannot make a statement today, but it is not very satisfactory that we should wait almost a week after the summit for a statement. Would it not have been possible for the Foreign Secretary to make a statement before then?

Mr. Short: The Foreign Secretary has not yet returned. The Prime Minister is anxious himself to report to the House on the conference.

LLANDUDNO

Mr. Wyn Roberts: asked the Prime Minister when he expects to pay an official visit to Llandudno.

Mr. Edward Short: I have been asked to reply.
My right hon. Friend has at present no plans to do so, Sir.

Mr. Roberts: In view of the Prime Minister's indisposition, he should perhaps change his plans. Llandudno is a very healthy resort. Meanwhile, perhaps the right hon. Gentleman would be kind enough to look into the matter of the rate support grant for Llandudno's county of Gwynedd, which is to receive a smaller share of the rate support grant during the coming year than it has received during this year. To assist the right hon. Gentleman in his consideration, will he bear in mind that the County Councils' Association sees the injustice of the working of the present rate support grant formula in this connection and is willing to reopen negotiations with the Government?

Mr. Short: I have looked into the question of rates in Gwynedd. Like all other areas of England and Wales, Gwynedd will receive a substantial increase in Exchequer grant next year, both in real terms and in money terms. Indeed, for the sparsity factor in Gwynedd there will be an additional £3 million, so that it is getting a fair share. Next year the Welsh domestic ratepayers will have relief of 36p in the pound—an increase of 2½ per cent. over this year's figure.

Mr. Lipton: While I welcome the Prime Minister's decision not to visit Llandudno for the time being, may I


ask him, when he is well enough, to nip down to Greenwich, where it is believed that Greenwich Mean Time is about to be abolished and replaced by something that is called World Time? Will he put up a fight to retain this last vestige of British sovereignty?

Mr. Short: I shall recommend my right hon. Friend to examine the robustness of my hon. Friend the Member for Lambeth, Central (Mr. Lipton) and of the hon. Member for Conway (Mr. Roberts) and then decide whether to visit Llandudno or Greenwich.

BRITISH STEEL CORPORATION (CHAIRMAN)

Mr. Spriggs: asked the Prime Minister when he last met the Chairman of the British Steel Corporation.

Mr. Edward Short: I have been asked to reply.
My right hon. Friend's last formal meeting with the Chairman of the British Steel Corporation was on 3rd July 1974, when he chaired a meeting of the National Economic Development Council.

Mr. Spriggs: Is my right hon. Friend aware that, since that meeting took place with the Prime Minister, Mr. Christopher Chataway—who has left the Conservative benches to become a political agent of the Tory Party on the mass media—has used the opportunity to get at the Chairman of the British Steel Corporation and that, in turn, the Chairman of the BSC has agreed that equity should be sold on the private market? In view of that undertaking given by the Chairman of the BSC, will my right hon. Friend take the earliest opportunity of replacing him by a man on whom we can rely?

Mr. Short: I not only read but saw the interview. I make no complaint about Mr. Chataway, who was doing his job as an interviewer, but neither my right hon. Friend nor I agree with what Dr. Finniston said. Dr. Finniston holds those views and is perfectly entitled to express them, but we do not agree with them.

Mr. Pardoe: Will the Lord President request the Prime Minister when he meets the Chairman of the BSC to ask what are his plans for the conservation of energy in the British steel industry? Will

he ask the chairman whether he recognises that the industry is a mass consumer of electricity, and what plans he has to reduce the industry's extravagant consumption of that commodity?

Mr. Short: That is an extremely constructive suggestion, which I shall pass to my right hon. Friend the Secretary of State for Energy.

Mr. Peyton: I hope that the right hon. Gentleman will be able to find something in his mind to quench the indignation of the hon. Member for St. Helen's (Mr. Spriggs). Does not the right hon. Gentleman think it would be seemly for the Government to take note of the opinions of Dr. Finniston, who, after all, is in a better position than is the Minister to judge the inadequacies of the system of nationalisation?

Mr. Short: I do not think that Dr. Finniston was suggesting selling it off because of its inadequacies, but rather because of its success.

UNITED NATIONS

Mr. Michael Latham: asked the Prime Minister whether he will seek to address a session of the General Assembly of the United Nations.

Mr. Edward Short: I have been asked to reply.
My right hon. Friend at present has no plans to do so, Sir.

Mr. Latham: Will the Prime Minister tell the United Nations of the deep concern felt by many people at the semi-recognition of the Palestine Liberation Organisation?

Mr. Short: The matter has caused us some concern. We studied each vote as it came up. On some occasions we abstained and on one occasion we voted against the resolution. These are resolutions in the Assembly and they have no legal force in the Assembly.

Mr. Rifkind: Will the right hon. Gentleman give us an assurance that in any future attempt in the United Nations to remove or diminish the rights of any member State, the British Government will not abstain but will vote against such a resolution?

Mr. Short: I cannot give an overall assurance of that kind. Every resolution that comes up must be considered on its merits.

Mr. Faulds: Will my right hon. Friend prevail upon the Foreign and Commonwealth Secetary to become as realistic, pragmatic and chauvinistic as is his French colleague, M. Sauvagnargues, in these matters?

Mr. Short: I am sure that, as always my right hon. self—my right hon. Friend —will be himself in all these matters, and not anybody else.

Mr. Heath: Is not the crucial point that none of the actions taken by the Assembly and none of the resolutions passed by it can add to or detract from the governing resolution of the Security Council on Middle Eastern affairs? Will the right hon. Gentleman reaffirm that that remains the Government's position, as it remains the Opposition's?

Mr. Short: That is indeed the position. The right hon. Gentleman has made the point rather more eloquently than I made it a moment ago.

Mr. Leslie Huckfield: Is it any use the Prime Minister's going to the United Nations if on vital votes, such as those on the expulsion of South Africa and the recognition of the Palestine Liberation Organisation, the United Kingdom does not exercise its vote?

Mr. Short: My right hon. Friend the Foreign Secretary has explained the position about South Africa. We believe in the universality of the United Nations and therefore we felt it right to abstain on this matter.

Mr. Hugh Fraser: Is "my right hon. self" a free translation of "L'état, c'est moi"?

RAIL SERVICES (DISRUPTION)

Sir Bernard Braine: asked the Secretary of State for Employment (by Private Notice) if he will make a statement about the continuing disruption to rail services in the South-East.

The Secretary of State for Employment (Mr. Michael Foot): Commuter and other rail services in the South-East have again been disrupted today by a 24-hour strike

by some signalmen. The travelling public have again been subjected to inconvenience and hardship.
The strike is wholly unofficial. The National Union of Railwaymen, which negotiates on behalf of all signalmen, has urged the men concerned to work normally and deplored the action being taken.
The signalmen concerned are variously reported to be seeking a 5 per cent. increase in pay and a further 10 per cent. responsibility allowance or a 30 per cent. increase over and above the improvements provided by the major restructuring agreement of earlier this year which was accepted by all three railway unions on behalf of all railwaymen. The National Union of Railwaymen and British Rail have made clear that they are not prepared to contemplate changes in this agreement, although I understand that they are discussing possible changes in the classification of signalmen's jobs.
In these circumstances, I would hope that the House would support the National Union of Railwaymen in urging the men concerned to return to normal working and bring to an end action which so disrupts services on which so many people, including fellow trade unionists, depend.

Sir Bernard Braine: Is the Secretary of State aware that his hope is not enough? Surely he must be aware of the misery and frustration endured by commuters, principally in Essex, over the last seven weeks and now by hundreds of thousands of travellers who have been affected today. How does he square that with the social contract? Is it not a fact that he has powers to intervene or that he could ask the Conciliation and Arbitration Service to do so? Why has he not exerted himself in this regard? Finally, does not this anarchic situation underline the urgent and compelling necessity for the Government to devise methods of resolving relative pay disputes, particularly those that injure large numbers of innocent people, such as the travelling public?

Mr. Foot: I certainly deplore, as I am sure does the whole House, the great inconvenience which has been caused for many weeks to the travelling public. As strongly as I can, I urge the signalmen to


return to work and to cease this action. But since this is an unofficial dispute which has been condemned by the union concerned, it would not be right for me to intervene, or indeed for the Conciliation and Arbitration Service to do so, in these circumstances. I do not believe that that would help in bringing about an end to the dispute. Indeed, it might cause larger difficulties still.

Mr. Moonman: I welcome the Minister's statement, because the excessive indignation which has recently been expressed by the hon. Member for Essex, South-East (Sir B. Braine) does not help. My constituency is equally involved, and inconvenience has been caused to many of my constituents. Does not my right hon. Friend accept that here we have a delicate problem of industrial relations which shows up the whole problem of differential systems? Will my right hon. Friend give attention to this aspect?

Mr. Foot: My hon. Friend the Member for Basildon (Mr. Moonman) was the first in this House to bring this matter to my attention, although we were concerned about the action which was being taken. As soon as we received reports about it some weeks ago, we looked at the whole position to see what action we could take which might have some reasonable chance of a better result. But it is a fact that the differentials which the signalmen claim are disturbed were determined in the Railway Staff National Tribunal after lengthy study, and were accepted by the three railway unions. Therefore, I do not believe that any actions should be taken which would disrupt that agreement.

Mr. Channon: Is the right hon. Gentleman aware that excessive indignation is not surprising when people have had to put up with inconvenience time and again in the past few weeks? Is he further aware that there is likely to be more action before Christmas? If he is not prepared to intervene, what are the Government prepared to do about the situation?

Mr. Foot: I understand the indignation and feelings on the part of the travelling public, feelings which have been expressed on their behalf in this House. But because there is indignation, it does not mean that intervention by the Govern-

ment would assist in ending the dispute. Indeed, what we should do if we followed the advice of the hon. Member for Essex, South-East would be to override the position of the NUR, a union which has within it every facility for signalmen to raise these questions if they wish to do so. The best course for signalmen is to raise these matters within the democratic union structure. That is the best way to bring the dispute to an end.

Mr. Arthur Lewis: Everybody regrets it when trade unionists come out on strike for whatever reason, but is my right hon. Friend aware that trade unionists rather resent the fact that certain people, particularly the highly-paid people in nationalised industries, the judges and all the rest, regularly receive increases of 30 per cent. without any question of having to strike to achieve them? Indeed, those trade unionists rather resent it when Ministers of the Crown are given 50 per cent. increases when trade unionists are confined to increases of 10 or 20 per cent. Will he give an assurance that he will not give to the judges or to the chairmen of nationalised boards 20, 30 or 40 per cent. increases, plus the perks which they receive, when they already enjoy salaries of £20,000 or £30,000 a year?

Mr. Foot: That is a very interesting comment, but it has nothing to do with the signalmen's strike. Indeed, the signalmen's strike has nothing to do with those questions.

Mr. Lewis: Yes it has.

Mr. Foot: I do not believe the solution which my hon. Friend seeks to provide would assist in securing an end to this action—and an end to this action is what I wish to see.

Mr. Speed: Will the Secretary of State accept that many thousands of people in Kent and Essex are fed up to the back teeth with the situation on the railways and see no prospect of an end to the trouble? If the signalmen's demands are met, will it be within or without the social contract?

Mr. Foot: It is not a question of its being within or without the social contract. The signalmen's claim about differentials arose out of a restructuring arrangement made by the railways. It


was a thorough restructuring which in my opinion involved considerable and justified increases for the whole range of railwaymen, including signalmen. It was one of the best settlements the railway-men as a whole have received over the years. It was accepted by the three unions in the railway industry, and the right course is that the signalmen who are on strike should accept that restructuring settlement.

Mr. Bagier: Will the Secretary of State use whatever influence he has with the Press to encourage it not to publicise and glamorise an organisation known as the Union of Railway Signalmen, whose head office apparently is in a council house and whose executive committee meets in a fish and chip shop? Will he use what influence he has to encourage the signalmen concerned to appreciate that within the last year they have had increases of nearly 30 per cent. and that their best interest is served by supporting the NUR, of which most are members?

Mr. Foot: If my hon. Friend is asking me to use my influence with the Press, I would remind him that perhaps my influence with them at this moment might not be at its peak. I should not like to raise any matter that might cause some difficulty, but it is a fact that the organisation concerned is not recognised by British Rail or by the NUR, nor is it affiliated to the TUC. As I understand it, it is not a regular trade union in any sense at all. I believe that occasionally the Press can assist in these disputes by reporting matters accurately.

Mr. Cyril Smith: Will the right hon. Gentleman tell us what the larger difficulties are to which he referred in answer to an earlier supplementary question on this matter? The right hon. Gentleman stated that there would be larger difficulties if he were to engage in this dispute. What are those larger difficulties? Does he agree that he ought to come clean with the House and say that this dispute is concerned with the right of a man to belong to the union of his choice and, further, that it is an inter-union dispute?
Finally, as the right hon. Gentleman appears to be unwilling to meet trade unions when it is the view of many of us that he ought to do so, will he on this issue, as on the mineworkers issue,

arrange a party political broadcast to speak to the men concerned?

Mr. Foot: The hon. Gentleman has misrepresented the situation in the union. If I were to follow the advice implied in his question, I believe that the disruption of British Rail could be greatly intensified. It would not be wise for hon. Members in any section of this House to advise the Government to usurp the authority of the National Union of Railwaymen in this matter. We should not scorn a restructuring arrangement which has been accepted by all the unions and has been greatly beneficial to all workers, including the signalmen, on British Rail. I think that for this House and the Department of Employment to seek to overturn all those arrangements would certainly not be a contribution to the convenience of the travelling public.

Mr. Tebbit: Is the silence that is hanging over the railway lines from my constituency to London part of the little bit of peace and quiet that the Prime Minister offered the country?

Mr. Foot: I am not sure that the hon. Gentleman's question was worth asking. Certainly I am doubtful whether it is worth answering. I think that I am giving the House the best possible advice for trying to secure the end of the dispute. My advice is that the signalmen should recognise that they will not succeed by this action. The best way to end the dispute is for the House to support what I have said.

Mr. Stoddart: Is my right hon. Friend aware that he has the support of hon. Members on this side of the House? We recognise that the recipe put forward by hon. Gentlemen opposite is a recipe for disaster and further chaos not only on the railway system but within the trade union system. Will my right hon. Friend continue on his present path, which I believe will be the quickest route to a solution?

Mr. Foot: I am sure that my hon. Friend speaks in this House for many more railwaymen than do all hon. Gentlemen opposite who have intervened put together.

Mr. Crouch: I am speaking not for railwaymen but for several thousands of


my constituents who are and have been inconvenienced for quite some time now. The right hon. Gentleman is a very different person these days, sitting in his present place, from when he used to sit below the Gangway and speak for the rights of individuals with some vigour and determination. This afternoon the right hon. Gentleman told the House that he fully understood both sides of the dispute. Will he reconsider the whole question of putting into action his conciliation and arbitration officers? The right hon. Gentleman knows the situation. I think that those officers could help.

Mr. Foot: It would be a very dangerous precedent if in a dispute of this character either the Secretary of State for Employment or the Conciliation and Arbitration Service were to intervene along the lines suggested by the hon. Gentleman. As I have already emphasised, it would usurp the authority of all the unions in the industry. I believe that that could cause great difficulties. So far from easing the position of the travelling public, I think that it could make for much greater difficulties.
The House might recall that a few months ago we had many disputes on the railways between two of the major unions concerned. Some of those disputes have been eased, partly because of the whole restructuring that took place. Therefore, I hope that hon. Members on both sides of the House, who are naturally concerned to try to ensure that they do everything possible to assist their constituents in getting to and from work in London, will not press us to take action which could throw us into far worse industrial trouble than we have to deal with here and now.

Sir Bernard Braine: On a point of order, Mr. Speaker. We are in the unusual situation that hundreds of thousands of people are threatened with a repetition of this industrial action next week. May I, through you, ask the Minister whether he will at least undertake to keep the House informed and will make a statement before the public are asked to endure this misery again?

Mr. Foot: The hon. Gentleman has no monopoly about desiring to see the end of the trouble caused to people travelling to and from work. I imagine that we all wish to see that trouble brought to

an end. However, I should be deceiving the House and prolonging the dispute if I were to say that it was possible for me to come here tomorrow or on Monday with some solution for dealing with it by some form of intervention. If I were to say that, it might encourage the signalmen to continue this action over a further period. As I have said, I believe that the only way that this dispute can be brought to an end is for the signalmen to recognise and understand what was done in the restructuring agreement and to recognise that, if they wish changes to be made in it, they should make representations through the democratic structure of their union to secure those changes.

BUSINESS OF THE HOUSE

Mr. Heath: Will the Leader of the House please state the business for next week?

The Lord President of the Council and Leader of the House of Commons (Mr. Edward Short): Yes, Sir.
The business for next week will be as follows:
MONDAY 16th December—There will be a debate on Defence, on a Motion to take note of the Secretary of State's statement on Tuesday 3rd December.
Motions on the Army, Air Force and Naval Discipline Acts (Continuation) Order, and on the Milk (Extension of Period of Control of Maximum Prices) Order.
TUESDAY 17th December—Second Reading of the Finance Bill.
Debate on ECC Document No. R / 2712 / 74 on Community Loans.
WEDNESDAY 18th December—Supply [5th Allotted Day]: There will be a debate on the Economy on a motion for the Adjournment of the House.
Motion on the British Leyland Motor Corporation Limited.
THURSDAY 19th December—Supply [6th Allotted Day]: The Votes on Account and Winter Supplementaries will be before the House.
Debate on Developments in the European Communities, March-October 1974 Command No. 5790.
Debate on EEC Documents R/2829/74, R/2155/74, R/2340/74 and R/2443/74 on Community Finance and on the Draft General Budget.
FRIDAY 20th December—It will be proposed that the House should rise for the Christmas Adjournment until Monday 13th January 1975.

Mr. Heath: A considerable number of points arise from the Business Statement. The House will have noticed the change of business on Tuesday from what was discussed last week. The whole House will be sorry to lose a second day's debate on defence. However, the Opposition felt that it was necessary to have a debate on the economy before we rose for Christmas. Therefore, we are giving up our Supply Day for that debate. The House will wish to return to defence after we get back in the New Year, when no doubt the Secretary of State for Defence will have carried out his consultations with our friends and allies concerned. In this connection, will the Leader of the House note that a "take note" motion will give the Opposition an opportunity to put down an amendment to the defence debate?
Will the right hon. Gentleman tell us when the Chancellor of the Exchequer will be making a statement on the result of his Middle East visit?
I understand that the White Paper on Public Expenditure will not be published until some time in the new year. That is very unsatisfactory. Hitherto, we have always had the White Paper before Christmas. Obviously, in debating the economy we should have been given the information about public expenditure cuts which the Chancellor of the Exchequer promised in his last statement. Will the Leader of the House ask the Chancellor of the Exchequer to give us information on that? Will he also let us know what he is proposing to do about nationalised industry prices, because he also promised us details of that in his Budget Statement?
Can the Leader of the House tell us when we shall have the revised Price Code, which is to come into effect, we understand, before Christmas.
On Wednesday evening there is a motion on the British Leyland Motor Corporation Ltd. How long shall we

have to deal with that? I understand that the motion concerns the giving of a guarantee for the first £50 million working capital to British Leyland. If it is proposed to hold only a one and a half-hour debate on an affirmative order, that gives very little time for the House to debate a most important matter. Will the Leader of the House say whether the time can be extended?
Can the Leader of the House then say on which day the Adjournment motion will be taken. If, as he suggests, it is not to be until Thursday, that is very late. When they were in opposition, the Leader of the House and his colleagues always protested if such a suggestion were made, and it will take time out of a very important European debate in which most hon. Members want to take part.
There is also an important matter concerning Northern Ireland. The Leader of the House promised us there would be new developments for dealing with Northern Ireland legislation, including a Grand Committee. Can he tell us when that will be finalised, and when we may expect his views on that matter?

Mr. Short: That is quite a tall order.
I confirmed what the right hon. Gentleman said. Tuesday was an Opposition Supply Day. This is a matter of the priorities of the Opposition. They decided to have a debate on the economy instead of a second day on defence. There will be ample opportunities in the new year for debating defence, both the White Paper and the individual Services.
I shall pass on to my hon. Friend the Chancellor of the Exchequer what the right hon. Gentleman has said about statements on his visit to Saudi Arabia, on the White Paper and on nationalised industry prices. The Price Code will be published next week, and we shall provide an opportunity to debate it after the recess.
The Adjournment motion, as the right hon. Gentleman has said, will we hope, be taken on Thursday. I am sorry about that, but all the days next week are extremely important ones. We rearranged the business this week to hold a debate on capital punishment. At the request of the Opposition we have rearranged business twice for next week. There are problems. This follows the precedent


created prior to Christmas 1973 when the right hon. Gentleman was Prime Minister. I am not suggesting that is a good reason for doing so. Nevertheless, there is that precedent.
With regard to the Northern Ireland Committee, I am sorry I have not yet reached agreement with everyone concerned. I hope to be able to discuss this through the usual channels and make an announcement before very long.

Mr. Heath: May I remind the Leader of the House of the point about British Leyland and the amount of time available for debate?
With regard to Europe, may I suggest that we have a suspension to take account of the time taken up on the Adjournment motion?

Mr. Short: I shall be very happy to discuss the subject of British Leyland through the usual channels. There will be a debate on the economy. I imagine that British Leyland will feature in the debate as well as during the period after 10 o'clock.
We will allow time at the end of the day for the European debate, if that is the general wish, to make up for "injury" time lost during the Adjournment debate.

Mr. Spriggs: May I press my right hon. Friend to give an undertaking today that we shall have a report on hon. Members' interests next week before the Christmas Recess?

Mr. Short: We have not yet received the report of the Select Committee, but as soon as we do so I shall see that it is made available.

Mr. Pardoe: I appreciate that the right hon. Gentleman has no say over the choice of subject for a Supply Day, but is he yet in a position to confirm whether the debate on Wednesday will be concerned with general matters of the economy or more particularly with the situation of sterling? If the latter, while of course the House would want to express its views on any matter under the sun, does he not accept that to discuss the British economy might not be showing a very good sense of timing? Would he care to comment on that?

Mr. Short: The debate will be held on a motion for the Adjournment. It will be a fairly wide debate. Therefore, any matter concerning the economy can be raised.

Mr. Wood: I assume that some of the matters will be discussed in that debate, but can the Lord President say when we shall have a specific debate on the very important statements made by the Secretary of State for Energy and the Minister for Transport last Monday?

Mr. Short: I am afraid I cannot promise any time before Christmas, but certainly I shall bear that in mind.
The Secretary of State said that this was an interim statement. I imagine that he will have something else to say in the new year.

Mr. Jay: Is my right hon. Friend aware that some of my hon. Friends and I have put down a Prayer against the Import Duties General (No. 5) Order, which would raise still further a number of import duties on food from 1st January 1975? Can we be assured that the House will have the opportunity to discuss and decide this matter before these far-reaching proposals come into operation?

Mr. Short: I will look at that and, although I cannot give any undertaking about it, I shall certainly consider it.

Mr. Carlisle: May I ask the Leader of the House what has happened to the Road Traffic (Seat Belts), Bill? He may remember that, despite objections from the Opposition, the Government's business managers insisted that we start the debate at about 9 'clock in the evening three or four weeks ago. If it is now to be adjourned until after Christmas, would it not be fairer to take the Bill away, reintroduce it, and start the debate again?

Mr. Short: No, I do not think so. As I explained, I tried to help the House on this matter. I promised that if we came to the Second Reading debate rather late in the day we would be prepared to adjourn the debate and come back to it later. A number of matters have come up in the last week or so. These have rather disorganised the timetable. The Second Reading of the Bill will be reinstated on the Order Paper after the Christmas Recess.

Mr. Faulds: Since the Opposition seem sadly short of steam, would my right hon. Friend suggest through the usual channels that they might provide a Supply Day when the House could examine the damaging effects of the Government's financial policies on the arts— indeed, when the House could pursue and prosecute the general lack of any Government policy on the arts whatsoever?

Mr. Short: A great deal of steam is coming from a number of quarters. My hon. Friend will have seen the statement made by the Under-Secretary this week. I think that the arts are being extremely well treaded in the present difficult economic circumstances.

Mr. Cormack: Will the right hon. Gentleman consider altering next week's business in view of the enormous complexity of the Finance Bill? Would it not be better to leave that until after Christmas and to debate the O'Brien Report in its place? Will he also pay a little attention to the early-day motion, signed by more than 70 of my hon. Friends, on the Shrewsbury pickets, and arrange for a statement to be made at the Prime Minister's meeting next week when he is better?

[That this House views with grave concern the possible constitutional implications of the Prime Minister's agreement to discuss with the TUC the case of the lawfully convicted Shrewsbury pickets.]

Mr. Short: I hope, in my business statement next week, to announce the date of the debate on the O'Brien Report. I am afraid we cannot alter the Finance Bill arrangements. It is the Second Reading, and there is a timetable for the Finance Bill. It is essential to get the Second Reading before Christmas.

Mr. Leslie Huckfield: Does my right hon. Friend recognise that "British Ley-land" means not only the manufacture of cars, trucks and buses but also hundreds of thousands of jobs? Since it is now the only major British-owned motor manufacturer, does he not think it is worth more than one and a half hours—

Mr. Short: This is the affirmative resolution required under the Industry Act for the guarantee to the banks. There will be a debate on the Adjournment on the

economy. My right hon. Friend the Secretary of State for Industry would be able, if he caught your eye, Mr. Speaker, to make a speech on this during the general debate.

Sir Bernard Braine: Does the right hon. Gentleman recall the promise the Prime Minister made to me a fortnight ago, that he would consider sympathetically the making of an early ministerial statement before Christmas on the subject of the world food crisis? If there are difficulties in that regard, perhaps the Government would consider the publication of a White Paper, since it is surely essential that Parliament and the nation should know what sort of response the Government are making to this very serious situation.

Mr. Short: I share the hon. Gentleman's concern about this. I know that for many years he has been extremely active in these matters and concerned about them. I shall remind my right hon. Friend the Prime Minister about his promise to the hon. Gentleman.

Mr. Peyton: Will the Leader of the House look into the position concerning when Written Answers should be published? I understand that on Monday this week Written Answers to defence Question were made available for publication but that for some reason publication was delayed.
I welcome what the right hon. Gentleman said about the Christmas Adjournment motion. Whatever precedents he may wish to quote, I hope that he will still agree that the motion should be taken earlier rather than later.
Will the right hon. Gentleman take note of the point made by my right hon. Friend the Member for Bridlington (Mr. Wood), that we shall require an early opportunity to discuss energy policy generally? Many hon. Members feel that the Secretary of State for Energy the other day put off more questions than he answered.
May I ask the right hon. Gentleman about the O'Brien Report? We had hoped for a debate on this matter, because it is a very urgent one for the agriculture industry. It has been put off again. But I hope that the right hon. Gentleman will find time for this in the first week after the Christmas Recess.

Mr. Short: Dealing first with the O'Brien Report, I have said each week for some weeks now that I could not find time for a debate before Christmas. However, it will appear in my next Business Statement. I note what the right hon. Gentleman said about energy, and I will convey it to my right hon. Friend the Secretary of State.
As for the right hon. Gentleman's question about Written Answers, I am afraid that I do not know the answer, but I shall look into it and see that the matter is put right.

Mr. Gow: Is it still the intention of the Leader of the House to table an amendment to the Servants of the Crown Order 1960? If so, when does he intend us to debate the subject?

Mr. Short: I have undertaken not to have this order put before the Privy Council until the House has had an opportunity to debate it.

Mr. David Mitchell: Is the Leader of the House aware that last Friday the Government accepted a motion calling urgently for measures to encourage enterprise and initiative? Can we have some indication of when we may expect a statement on these urgent matters?

Mr. Short: The sentiments inthat motion motivate everything that the Government do.

Mr. John Davies: In announcing Thursday's business, the Leader of the House said that there would be a debate first on the six-monthly report of the Community and that that would be followed by a debate on two instruments. Would it not be more convenient to take, at the same time as the six-monthly report, the instrument dealing with the Commission's report on Community finance, which relates to our renegotiation aspirations? They are associated subjects, and it seems a pity to divide them.

Mr. Short: If that is agreeable to the Opposition, I shall be happy to discuss the possibility.

Mr. Jasper More: May we have a clear answer about the Shrewsbury pickets? In view of the Prime Minister's illness, has the proposed meeting with the TUC taken place? Will the Leader of the

House guarantee in any event that before we adjourn for Christmas we shall have a statement on how this important matter stands?

Mr. Short: I cannot answer the first part of that question, I am afraid. I am not sure on which day the Prime Minister was seeing the TUC. I know that he has gone to bed today, and that he has been instructed to stay there until Monday at the earliest. If the meeting has not already taken place, clearly it will not take place this week. The purpose of that meeting was to discuss the issues arising out of this case. I shall pass on to the Prime Minister what the hon. Gentleman has said, but I am not sure that this is an appropriate matter for a statement. In any event, my right hon. Friend the Home Secretary, who is the Minister responsible, is to answer Questions in the House next week about it.

Mr. Kershaw: On Monday's business, will there by a statement about the European summit meeting? If there is one, no doubt we shall wish to spend time on it, which will take further time from the defence debate. In those circumstances, will it be possible to extend the time for the discipline Acts after 10 o'clock so that the same subject may be pursued?

Mr. Short: It would be so, and I shall look at that. I am not sure what the position is or how long the statement will take.

Mr. Onslow: In view of the statement by the Secretary of State last night, that our present difficulties are much greater than many people understand, and in view of his reference to the possibility that most people may face a period of real austerity, will the Leader of the House undertake that whoever opens the debate on the economy next week on behalf of the Government will be able to spell out what is meant by "real austerity ", will be able to explain the Government's understanding of the difficulties, and will tell us that the effect of them on such matters as the National Health Service will be taken into account?

Mr. Short: The Government have never disguised the seriousness of the situation. [Interruption.] If the hon. Member for Woking (Mr. Onslow) would like a list of speeches by the Prime


Minister in which he has pointed out the seriousness of the situation, I shall be happy to send it to him. Certainly there will be a Government speaker in the debate on the economy who will deal with the matter objectively, clearly and in no uncertain terms.

Mr. Lawson: Can the Leader of the House say when the employment protection Bill will be brought forward, and assure us that, before it is, the consultative document will be debated fully, because it is causing grave concern throughout large sectors of British industry, especially to many smaller firms?

Mr. Short: I cannot give an exact date for the Bill. It will not be very long delayed. I hope that it will be early in the new year, probably the end of January or the beginning of February.

Mr. Blaker: Is the Leader of the House aware of the very serious situation which will arise from the end of this month in the glasshouse sector of the horticulture industry? Has he seen an early-day motion calling attention to the problems resulting from the high cost of fuel oil, and will he ask the Minister of Agriculture to make a statement about what he proposes to do from the beginning of the year?

[That this House deplores the Government's refusal to assist the glasshouse sector of the horticulture industry with its oil costs after the end of 1974, bearing in mind the importance of the glass-house sector to the economy and the enormous investment in it in the last 10 years; and calls on the Government to negotiate an extension of the present subsidy until the end of June 1975 and to work out in consultation with our partners in the EEC a scheme for a subsidy on a diminishing basis over the next six years as recommended by the farming organisations of the EEC member countries.]

Mr. Short: My right hon. Friend is aware of the importance of this. I shall refer the hon. Gentleman's remarks to him.

Mr. Charles Morrison: When, as I hope he does, the Minister of Agriculture responds next week to the question asked by my hon. Friend the Member for Blackpool, South (Mr. Blaker), will

he also make a statement about the export of live store animals, which was the matter which I raised last week with the Leader of the House, and in that respect has the right hon. Gentleman had any response from the Minister of Agriculture?

Mr. Short: I do not know whether my right hon. Friend will be able to make a statement next week, but I will pass on to him what the hon. Member for Devizes (Mr. Morrison) has said.

Mr. Marten: In the debate next Thursday on the Common Market, shall we have any indication of the Government's view on whether we are to have a referendum and, if so, what form it will take? Before such a statement is made, may I advise the Government to study what the Conservative Government did about the referendum on the legislation for Northern Ireland?

Mr. Short: There will not be any statement next week about a referendum. Certainly our firm undertaking stands. This matter will be put to the people when the renegotiation has ended—

Mr. Arthur Lewis: In a ballot.

Mr. Short: —in a ballot, and the people will make a decision themselves. But I am afraid that there will be no statement next week on a referendum.

Mr. Pym: When does the Leader of the House propose to set up a Select Committee on agriculture? Is he aware that the Minister of Agriculture is in favour of this and that right hon. and hon. Members on both sides of the House will favour its early establishment?

Mr. Short: I have never promised to do this, but I shall be happy to discuss it through the usual channels.

Mr. Michael Latham: When are we likely to have the long-promised and now urgent detailed statement on the development land tax?

Mr. Short: This will be a while coming forward. If the hon. Gentleman shows a little patience, it will come in due course.

Mr. Michael Shaw: In view of the comment by the Leader of the House about the Price Code not being debated until after the recess, shall we be able


to debate the document prior to the code being implemented?

Mr. Short: It will be published next week and debated some time after recess.

RATE SUPPORT GRANT

Mr. Speaker: Before calling upon the Secretary of State for the Environment to move his motion relating to rate support grant, I will tell the House that I have not selected the amendment in the name of the hon. Member for Carmarthen (Mr. Evans); and that it is the custom and practice that we should take the first two items on the Order Paper together—that is, the Rate Support Grant (No. 2) Order 1974 and the Rate Support Grant (Increase) Order 1974, unless there is objection.

4.10 p.m.

The Secretary of State for the Environment (Mr. Anthony Crosland): I beg to move,
That the Rate Support Grant (No. 2) Order 1974, a copy of which was laid before this House on 5th December, be approved.
When we last debated rates on 20th November I was in the final stages of the negotiations on rate support grant and therefore not in a position to give any hint of relief for hard-pressed ratepayers. Since I could say nothing. I chose to say it in a lighthearted rather than solemn manner but the effect was that I was soundly rebuked by the Savonarola of the Tory benches, the hon. Member for Hornsey (Mr. Rossi). I promise that my speech this afternoon will not contain a single joke.
Only now, therefore, can I commend to the House a settlement which greatly reduces the threat of massive rate increases next year. The threat was only too real. Our estimates showed that if we did not take exceptional action this year, domestic rates next year would have gone up on an average by 70 to 75 per cent., and in many cases by 80, 90, or 100 per cent, or even more.
The hon. Member for Southend, West (Mr. Channon) in the last debate spelled out to the House just how severe were the increases looming over particular local authorities, and the forecasts of treasurers up and down the country bore him out. Why were the prospects so grim? First, of course, because of the general level of inflation. Local authority costs, as we all know, are peculiarly vulnerable to inflation. Their services are labour-intensive, yet there is much less scope than in other parts of the


economy for obtaining offsetting gains in productivity. So inflation hits local authorities hard, whatever is happening to the real standards of their services.
Secondly, we face the problem caused by past under-rating for inflation. Local authorities have been increasingly forced into massive and expensive short-term borrowings which have meant that this year they were half lost before they started. I do not wish to be party political today, so I forbear from mentioning my predecessor's advice, only too readily followed, to assume only a 9 per cent, rate of inflation.
Thirdly, we face the continuing impact of a reorganisation of local government which in our view has proved, as we forecast it would, expensive and uneconomic. Lastly, central government had lost all control over actual local authority expenditure. I strongly support, as all of those on this side of the House support, a steady increase in desirable public expenditure. But the increase must bear some reasonable relationship to the general rate of economic growth.
In the last three years, local authority spending has gone up much faster than Britain in our present economic plight can possibly afford—in 1972–73 up 8 per cent.; in 1973–74 up 8 per cent. ; and in 1974–75 up possibly into double figures. All this, of course, is in real terms and has nothing to do with inflation. Growth at this rate cannot go on for ever, and it is the job of the Government—I hope supported by hon. Members in all parts of the House—to convince local authorities of this essential fact of life.
That, then, was the situation, the legacy, which we faced when we began the grant negotiations this year. The first thing was to deal with the problem of past under-estimates of inflation. I have done this through the mechanism of the 1974–75 increase order. That order is, of course, designed mainly to help authorities with the effects of inflation in the current year, in this case 1974–75. The latest estimate that we have for the increase in pay and prices relevant to this order is £1,200 million. I propose to pay grant on this at the same percentage rate as in the main 1974-75 Rate Support Grant Order—that is, 60·5 per cent. But on top of this, which, as hon. Members will be aware, is the usual increase order payment, I propose to give local authorities a further

£350 million. This is a once-for-all payment. Its aim is broadly to compensate authorities for their past underestimation of inflation when they followed the advice of the last administration.
I stress that this £350 million represents a quite exceptional extra payment to cover the problems which local authorities have experienced in 1974–75. Looked at nationally, it should enable authorities to start next year, 1975–76, without a massive carry-over of deficits, though I cannot guarantee that it will clear the deficit of every individual authority.
We cannot repeat this exceptional payment and in any second increase order which may be made the grant percentage will revert to 60·5 per cent., but, I hope, looked at nationally, we shall have wiped the slate clean and put authorities in a position to tackle next year's problems from a sounder base. For future years if, post-Layfield, the system continues, we shall want to talk with local authorities on what improvements we can make to the whole mechanism of increase orders.
Turning to next year, I discuss, first, how we set the total amount of expenditure on which the Government are willing to pay grant; then the percentage of that expenditure which the Government will finance ; and then the distribution of the Government grant between different local authorities.
Under the terms of the Local Government Act 1974, from which this order derives, my Department and the local authority associations forecast each year the total of local authority relevant expenditure—a term which covers virtually all net local authority expenditure met out of the revenue.
This year, for the first time, specific grants for most highways and transportation expenditure are replaced by the new transport supplementary grant, so all estimated local authority expenditure on transport, apart from that estimated to be met from borrowing, is now considered as relevant expenditure. This year we have had to look far more stringently than in the past at the expenditure which we can accept. We face, as the House well knows, a quite exceptionally grave economic situation and local authority spending can no more escape the consequences of this situation


than can any other form of desirable spending.
We began by examining various alternative levels of spending, but as the bleakness of the economic outlook became clearer it was obvious that we should have to go for an exceedingly tough option. We discussed this in very great detail with the local authority associations. We finally decided that we should allow for no real growth in spending next year over the best estimate of this year's spending except for an allowance for inescapable commitments. The inescapable commitments that we have in mind are such as the revenue consequences of capital commitments, the cost in a full year of staff recruited for less than a full year during 1974–75 and extra spending made necessary by demographic changes and so on.
We calculate that these inescapable commitments mean a real growth on average of some 4 per cent, next year. But I must emphasise that not every authority will have a growth rate of 4 per cent. Some must have a great deal less if the overall 4 per cent, is to be achieved, since in other areas the inescapable commitments will amount to more than 4 per cent. The broad and often harsh implications for different services are set out in the report on the order which has been laid before the House.
The total for relevant expenditure which we arrive at is £8,171 million—that is, at current November 1974 prices. This sounds like a large sum, and indeed it is a large sum. But at the same time it represents a severe reduction—of over one half—in the rate growth in the real spending which has occurred in the last three years. I shall discuss later how we are to ensure that this lower rate of growth is achieved in practice.
When the level of relevant expenditure is agreed, the Exchequer grant is fixed as a percentage of it. Last year this was set at 60·5 per cent. If we had stuck to that figure this year we should have suffered the massive rate increases which were hanging over us before this settlement was made, and which treasurers up and down the country were so vividly forecasting. We therefore decided on a large increase, and settled on a grant

percentage of 66·5 per cent, of relevant expenditure. That is an increase—an unprecedented increase—of six full percentage points over the last year.
The total of relevant expenditure agreed with the local authority associations is £8,171 million ; the rate of grant is 665 per cent, and, according to the slide rule, that means total Exchequer help of £5,434 million—a massive increase in Government help. It means about £2,000 million more in grant for local authorities next year than in the corresponding settlement this year. Provided that local authorities stick to what is suggested for their expenditure, it banishes the spectre of 70 per cent, average rate increases.
I am afraid that rates will nevertheless go up. However, if, and only if, local authorities stick to their side of the bargain, I reckon that the average increase—I stress the word "average"— will be about 25 per cent, for domestic rates and 20 per cent, for non-domestic rates, though with inevitable variations around the average.

Mr. Geoffrey Finsberg: Will the average in London be anywhere near 25 per cent., or will it be nearer 50 per cent?

Mr. Crosland: As the hon. Gentleman knows from his own experience, the average in London will certainly be substantially higher than 25 per cent. We cannot give an exact calculation, but I would not dissent from some of the calculations that the LBA and others have been making about London.
That is the total grant. The next stage is to divide that total amongst the various local authorities. From the total of £5,434 million of Exchequer grant, we subtract a total of £729 million for the various specific and supplementary grants. That leaves £4,705 million to be distributed in the needs, resources and domestic elements of the rate support grant. I should like to deal with these three elements in turn.
The domestic element, about £619 million, meets the full cost to rating authorities of levying lower rates on domestic than on non-domestic properties. The amounts in the pound of domestic rate relief which authorities are required to give are prescribed by the Secretary of


State each year. This order prescribes 18·5p for all English authorities, and 36p for the Welsh authorities. These are big increases over this year—5·5p and 2·5p for England and Wales respectively—and, without them the domestic ratepayer would face very much larger rate increases next year.
The resources element, about £1,328 million is designed to help less-well-endowed authorities whose rateable value per head is below the "national standard" set for the year of the order. In effect the Government step in as if they were a ratepayer and pay rates on the deficiency in rateable value. For the coming year I propose to increase the national standard rateable value by £16 to £170. This will ensure a greater equalisation of rateable resources and 93 per cent, of the rating authorities will receive resources element in the coming year.

Mr. John Nott (St. Ives): I asked last year the same question that I want to ask this year. Could the Secretary of State explain, going back to an earlier paragraph in his speech, the large discrepancy between Wales and English counties? I have never had a satisfactory answer to that question, which is a matter of grave concern and distress in Cornwall, as he knows. Could he give us the reason for this wide margin?

Mr. Crosland: The basic reason for the wide margin is that the cost both of local government reorganisation and of water reorganisation was much greater in Wales than it was in England—

Mr. Nott: But not greater than it was in Cornwall.

Mr. Crosland: In general, it was much greater in Wales than in England. The Secretary of State for Wales will no doubt have something to say on this matter when he winds up the debate—

Mr. John Pardoe: I should like to be Secretary of State for Cornwall.

Mr. Crosland: If the hon. Member would take that job, that would be very interesting and our troubles would be over. But I would reassure hon. Members from the West Country and elsewhere by saying that the margin between England and Wales has, as the figures I gave showed, been narrowed this year as compared with last. So we have gone

some way to meet the hon. Gentleman, although whether the Secretary of State for Wales entirely approves of this narrowing of the gap remains to be seen.
I turn now to the needs element of £2,758 million, the largest element in the rate support grant and much the most complicated. It is intended to compensate local authorities for variations in their spending needs, so that the net cost per head of providing a similar level of services should be broadly the same in different sorts of area.
I have had some hard things to say about the record of the previous administration on local government finance. But here at least I can pay a tribute to the right hon. and learned Member for Hexham (Mr. Rippon) and the right hon. Member for Crosby (Mr. Page). Last year, for the first time, they based the needs formula on a thorough-going and objective statistical analysis of local authority spending. Unhappily for them, this turned out to be at the expense of a number of traditionally Conservative areas, and so they tried to cancel out its effects by the so-called "high cost weightings" in favour of some better-off areas and the proposal, which we scrapped, for variable domestic relief. However, at long last, the appalling problems of the inter city areas received at least a measure of proper recognition in this year's needs element formula.
For next year, we have retained the essential features of this formula but have tried to improve and refine it in the light of representations from local authorities and from all parts of the House. We have received many of these, and we have studied them with care.
But local authorities have asked me to do two irreconcilable things for next year. They urged that I correct the anomalies of this year's arrangements, but they also asked me to avoid at all costs a second year of massive distributional changes. This was perhaps not very logical, but it was very understandable. So I have done what I can to meet them. Half of next year's needs element will be distributed on a new, improved formula. But the other half will be allocated in proportion to the sums which local authorities are receiving for the current year. This will permit a measure of change but will keep it within reasonable bounds.
I should like to deal with a few of the improvements in the needs formula. I will not go through them all, as they are adequately explained in the report on the order. We shall be helping local authorities in growth areas by using more up-to-date population figures and education units in the grant calculations. I shall also be helping London by increasing the special London weighting in the formula. I have grave doubts whether I shall completely satisfy either the hon. Member for Northampton, South (Mr. Morris) or my hon. Friend the Member of Hackney, South and Shoreditch (Mr. Brown), but the trouble is that more for one authority means less for another.
We have found that authorities in low-income areas tend to spend less in relation to their needs than other authorities. So, as I said in previous debates I would seek to do, I have made a special allowance in our calculations, which should prevent their being penalised for this. I am sure that that will not satisfy them either. They would like still more help. But they will do better than some prosperous areas in the South-East, which are also not altogether pleased with me.
The metropolitan districts of Tame-side and Trafford will receive some of the biggest needs element increases in the country, thanks largely to a major improvement which we are making by using data for our calculations which, unlike last year's data, accurately reflect the position in the new local authority areas.
However, I am sure that my hon. Friend the Member for Manchester, Gorton (Mr. Marks) and the hon. Member for Stretford (Mr. Churchill), were he here, in their contrasting styles, will take me to task, none the less, for having done nothing in the formula to compensate for the severe incidence of reorganisation costs in these and other areas. I can assure them that it was only most reluctantly that I decided not to earmark a part of the grant to cover the costs of local government reorganisation. The trouble is that there is simply no answer to the question, how much less would this authority be spending if its boundaries and responsibilities had always been as they are now? Without an answer, there could be no fair basis for sharing out the money.

Dr. Keith Hampson: May I ask the right hon. Gentleman a couple of brief questions on the educational aspects of the formula? Will he consider earmarking a sum for teachers' salaries? For example, the Leeds local authority and many other local authorities are prepared not to fill posts. If in the formula there is a weighting for such matters, there is no guarantee that the authorities will spend it on supplying teachers.
Second, has the formula been readjusted for the unusual demands which the authorities face as a result of the recommendations of the Houghton Committee? Will the increase order cover the backdated lump sum payment in those recommendations? Does the right hon. Gentleman realise that the cities such as Leeds and Bradford, that he is trying to help most, will have to borrow to cover that and carry over the deficit, putting the interest charges on to next year's rates?

Mr. Crosland: I hope that on detail the hon. Member for Ripon (Dr. Hampson) will be kind enough to table Questions to my right hon. Friend the Secretary of State for Education and Science. I shall try to answer the two basic points that he raised. We calculate that the teachers coming out of the colleges this coming summer will be employed as a result of the total grant settlement. Second, the Houghton Report has been taken into account in the main order. We have considered the Houghton Report in all our calculations. We do not yet have the final report but it will figure in the increase order No. 2 for 1974–75 which will no doubt come into effect later in the year.

Dr. Hampson: Dr. Hampson rose—

Mr. Crosland: I think that on matters affecting particular spending Departments it would be helpful if the hon. Gentleman tabled specific Questions which my right hon. Friends will be able to answer more authoritatively. No decision has been taken about the timing of the second order.
I was speaking about the costs of local government reorganisation and I return to a crucial point in the settlement— namely, how do we contain local expenditure to the level which we have


estimated? The first obvious point is that few authorities will be keen to increase their spending over the estimated level. Domestic rates will go up by 25 per cent, on average anyway. Given this, the pressure to keep the increase down to the minimum, by holding back on expenditure, will be very strong this year.
Secondly, the Government are determined to give a lead to authorities in indicating where they consider the cuts in the rate of growth of services might fall. When the Government impose restrictions, it is only right that the Government should take the blame. Already the report on this order indicates broadly what areas we have in mind, and we shall be issuing a circular which will specify them in more detail. I would add that we recognise that one thing irritates local authorities more than anything else. If in the annual settlement the Government say "Hold back", while individual Ministers go round making speeches calling on local authorities to spend more, the Government lose all credibility. I intend to do everything within my power to ensure that the Government do not urge expenditure on services with one hand while restricting expenditure with the other.
Thirdly, to help local authorities restrain their expenditure, I have proposed that they and central Government should institute a joint watch on local authority staff numbers. It is not our intention to evolve a rigid system, with hard-and-fast staff quotas for each local authority service. Our aim is to keep down the total, which has been rising rapidly in recent years. We believe that the total number of local authority staff should remain roughly constant in the coming year, with only very small increases to allow them to meet inescapable commitments. But it will be for each individual authority to decide how to implement this guidance, and how to allocate staff between services.
These three factors will, I hope, ensure that we do not see the out-turn for expenditure in 1975–76 exceeding the estimate in the way that it has done this year. It has enormously exceeded the estimate this year. I am grateful to the authorities for their co-operation, and I look forward to an era in which we can make far better estimates of spending

than we have been able to make in the past.
But for next year local authorities must keep a very tight grip on their expenditure. Equally, it is essential that they make a realistic allowance for inflation in setting their rates. We simply cannot afford a continuation of the massive short-term borrowing which local authorities were forced into this year. We must re-establish the principle that current expenditure is met from the general rate fund and not from borrowing.

Mr. Nicholas Ridley: Will the right hon. Gentleman say what he thinks is a realistic estimate for inflation for the year ahead? It seems impossible for the Government to make such a condition—I entirely agree with it in principle—unless they are prepared to help the authorities as to what a realistic estimate would be.

Mr. Crosland: I take the point that the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) is making. I do not believe that anyone in central Government or local government is in a position to put forward a precise figure for the likely rate of inflation next year. The uncertainty of world commodity markets and many other factors make that impossible. I should more accurately and sensibly have said a bracket of likely rates.

Mr. Ridley: What is to be the bracket?

Mr. Crosland: We have a lot of choice these days.

Mr. Ridley: Mr. Ridley rose—

Mr. Crosland: No, I shall not give way. This matter has been discussed in the House again and again. It was discussed at considerable length when my right hon. Friend the Chancellor of the Exchequer introduced his autumn Budget. It was discussed during the debate on the previous Budget. The Government were not then prepared to publish their forecast of the rate of inflation next year.

Mr. Ridley: My local authority, which I met last week, raised this matter with me. Its representatives said that they had been asked to calculate a realistic rate of inflation and that they had no idea what bracket that should cover. Does the Minister not think it ridiculous


for the Government to urge local authorities to hold down expenditure if at the same time the Government, who are responsible, are unable to forecast even a wide bracket? It is becoming essential in these times of high inflation that the Government prepare estimates for all sorts of bodies, including local authorities, which will enable them to make reasonable estimates.

Mr. Crosland: No doubt these matters will be discussed in the general economic debate next week when the Chancellor will be speaking. The point that I am making is that we do not want to repeat a situation in which my predecessor in office urged the local authorities to budget for a 9 per cent, rate of inflation when in fact it was already double that rate. That is the kind of disparity and discrepancy that we wish to avoid next year. That does not require a precise figure to be put on the likely rate of inflation.

Mr. Paul Channon: As the Minister has criticised my right hon. and learned Friend the Member for Hexham (Mr. Rippon), will he tell us what the local authorities should budget for next year?

Mr. Crosland: The Chancellor explained at great length in his November Budget speech that the Government were not prepared to make a precise forecast of the likely rate of inflation for the next 12 months. I believe that that was a sensible attitude to take. Probably most right hon. and hon. Members and most people in the local authority world can make some sort of realistic assessment of the brackets.
In conclusion, it is not easy to strike the right balance between a low grant setttlement, which imposes unfair burdens on local authorities and the ratepayers, and a high grant settlement, which imposes unfair burdens on the Exchequer and the taxpayers. I have tried to steer a middle course between these two extremes and if Press comment is a reliable, guide I think I have succeeded. The Economist of 30th November regarded the settlement as
so generous that the National Association of Ratepayers Action Group had almost been done out of a job 
while the Morning Star of three days earlier thought it "completely in-

adequate.". I prefer the judgment of the Municipal Jouranl that my proposals are "generous under the circumstances" or the judgment of the Financial Times that they are
a reasonable compromise and a fair one
None of this means that the ratepayer will have an easy time next year. The problems we faced went too deep, and the economic problems of the country are too difficult to allow that. We look forward to the Layfield Report, but in the circumstances which we inherited it is a major achievement to keep rate increases next year within bounds.
Many of my hon. Friends have been kind enough to table an Early-Day Motion which reads as follows :
That this House welcomes the record increase in both size and proportion of the rate support grant for 1975-76 which will help to alleviate substantially the domestic rate burden; recognises that this increased support comes at a time of unprecedented economic difficulties; and notes with pleasure the satisfied response of the local authority associations.
They strike me as exceptionally shrewd and wise words. I hope that Conservative hon. Members will give us the support which we shall surely earn.

4.40 p.m.

Mr. Paul Channon: The right hon. Gentleman said that he was not going to make jokes, but he concluded with one nevertheless when he read out that early-day motion. It will be interesting to see in a few months' time how many hon. Members will be prepared to sign such a motion, and how many of them come from the London area.
This debate is frequently technical, as the right hon. Gentleman himself pointed out the last time we discussed the subject. Over the years the problem of rates has become so important that it has been reflected in the attendance in the Chamber, and a wholly new situation has arisen in regard to the domestic rating system. My right hon. Friend the Member for Finchley (Mrs. Thatcher) earlier this summer, and I in our Supply Day debate recently, set out our view that the problem of rates has been altered fundamentally, largely because of inflation, and that we believe that urgent action is required on the domestic rating front.
There are certain points of agreement between the Government and the Opposition about the rate support grant. We think it right that the Exchequer should meet 66½ per cent, of the approved local government expenditure next year as opposed to 60½ per cent. We believe that it is essential that action should be taken along these lines; otherwise the burden on the ratepayer, as the right hon. Gentleman has said, would be intolerable. I note that the domestic element is to go up from 13p to 18·5p.
We have heard the explanation—not wholly convincing—of the differential between England and Wales. No doubt the Secretary of State for Wales will deal with that aspect in more detail when he replies. It is increasingly being questioned by hon. Members on both sides of the House who represent English constituencies, and the Secretary of State for Wales has been accused of not answering. I hope that he will give us the answer tonight.
Early in the summer the Secretary of State for the Environment talked about his original proposals for rate support distribution as having an element of rough justice, if not capriciousness. Many factors must be taken into account. Local government spending is to rise in real terms by 4 per cent, next year, while public spending in general will rise by 2·75 per cent. The right hon. Gentleman estimates that the result of the rate support grant, even after the extra increase on this occasion, means that the average householder will pay next year £1·25 for every £1 he has paid this year. That is not a matter for complacency.
I believe that next year will see the largest rise in the rates in our history, except possibly for this year. The right hon. Gentleman's own White Paper says that the average of 25 per cent, increase disguises many wide variations, and many people will be paying far more than 25 per cent, extra in their rates next year.
I have an example, given to me in the last few days, of a small business man in one of the new towns. He paid about £570 in rates on his small premises in 1973–74. He has been told that it is likely that the rates for 1975–76 will be £1,345—which means that his rates will have nearly trebled in three years. The total increase in his rates bill will be £770.

Mr. John Tomlinson: What was the date of the letter?

Mr. Channon: Within the last few days.

Mr. Kenneth Marks: What is the rate poundage?

Mr. Channon: I can go into all the details, if hon. Members like. I cannot give details of the rate poundage at the moment but it can easily be found out. Such are the increases that people have to face, and I am surprised that hon. Members opposite should dispute them. They are clear evidence of the problems faced by domestic ratepayers, small shop-keepers and traders.

Mr. James Wellbeloved: Does not the hon. Gentleman realise that in London and the rest of the country the greater burden that is falling upon the domestic ratepayer is caused not so much by inflation as by the direct results of the reorganisation of London government in 1962 and of local government elsewhere in 1972? Does not the hon. Gentleman realise that, in London in particular, the escalation over the last 10 years has been the direct result of the policies imposed upon unwilling local ratepayers and councillors by the Conservative Party? Will the hon. Gentleman now stop trying to make cheap political capital out of the current economic difficulties, and recognise—

Mr. Deputy Speaker (Mr. Oscar Murton): Order. If the hon. Member for Erith and Crayford (Mr. Wellbeloved) catches my eye, he can make his speech then. I would prefer him not to make it now.

Mr. Channon: If ratepayers in London believe that their increase in rates next year was caused by the local government reorganisation of 1962, they will believe anything. Even the constituents of the hon. Member for Erith and Crayford (Mr. Wellbeloved) will not believe that one. Eleven years later, with the Labour Party having been in office more than half that time, the hon. Gentleman still blames local government reform in 1962 for the rise in rates.

Mr. Wellbeloved: And the reorganisation in 1972.

Mr. Channon: I return to the point about the 25 per cent. increase and


whether it is an average figure. We have been told that there are no plans to continue in 1975–76 the special relief for domestic ratepayers which the Government introduced in July. There will be no special domestic relief for 1975–76 similar to the relief given in 1974–75. Did the Government estimate of an increase of 25 per cent. take account of the fact that they are doing away with the special rate relief which was given this year? If not, I suspect that the average itself must be misleading.

Mr. Crosland: I should clear this point up now. The 25 per cent. increase which we estimate is an increase on the level of rates after the July relief.

Mr. Channon: The right hon. Gentleman is saying that people who had a large rate increase this year, which was abated to some extent, will have to pay only 25 per cent. more on top of the abated increase they had this year.

Mr. Crosland: Yes—the abated increase.

Mr. Channon: I am grateful to the right hon. Gentleman. This is an important matter to get straight. There has been some confusion about it.
I think that the most difficult situation to arise will be in the Greater London area, but not because of local government reform in 1963. It will be because, according to the Evening Standard, next April the rates in London will go up by £1 a week on average. There have been forecasts that the GLC precept will go up by 100 per cent.—indeed, one forecast put the increase at 110 per cent. Perhaps Labour Members, who are more closely in touch with the leadership of the GLC, can tell us how true these forecasts are and what effect such increases would have on millions of ratepayers in London.

Mr. Michael Ward: Will the hon. Gentleman acknowledge that if the precept of the GLC should rise by a very large amount—and contained in it is the precept for the Inner London Education Authority—the ratepayers should be aware that no rate support grant element is involved and that it is, therefore, a crude increase? One should bear that factor in mind in using these crude percentages.

Mr. Channon: Yes. What I am saying is that the precept will rise a great deal, which will have an effect on the rates levied in the boroughs, and the effects on the rates levied in the boroughs are very serious indeed. I hope that some of my hon. Friends will be able to catch your eye, Mr. Deputy Speaker, to explain what is likely to happen in London next spring, because I think that the rises will be very serious. No one can be sure in detail, but I have yet to meet anyone who forecasts less than a 40 per cent. increase in London in the coming year, and I think that in many boroughs the increase will be considerably more than that. I hope that my hon. Friend the Member for Hampstead (Mr. Finsberg) will be able to catch your eye, Mr. Deputy Speaker, in order to tell the House what he thinks will happen in London next year.
The right hon. Gentleman ducked the question of what estimate for inflation local authorities ought to be prepared to make. I believe that the Government have some duty to tell local authorities just what to expect—not exactly, but within a bracket. Within what bracket do the Government believe that the rate of inflation will be? We all recall the estimates given during the General Election campaign. It is futile for Ministers to pretend that during the election campaign Ministers did not give highly optimistic estimates when it happened to suit them at the particular moment. We all remember the famous 8·4 per cent. The Chancellor of the Exchequer will never live that down. That was what he said the actual rate of inflation was—8·4 per cent. We shall see whether he was right.
We were told yesterday that the Secretary of State—[An HON. MEMBER: "What about 9½ per cent. mortgages?"] We are not in power. We have not had the chance of carrying that out, as we would have done by Christmas.
The Secretary of State for the Environment was rather coy about telling us the rate of inflation. His right hon. Friend the Secretary of State for Prices and Consumer Protection was reported yesterday in The Times as having said that the rate of inflation will be 17 per cent. next year, yet during the General Election campaign she was saying that inflation would go down. Now we are told that


it will be 17 per cent. next year. The right hon. Lady said that when she was in America a few days ago.
The right hon. Gentleman estimates that domestic rates will rise on average by 25 per cent. a year. Surely we are entitled to know what this means. If inflation is running at 9 per cent. or 10 per cent., or some figure like that, why do rates have to rise by 25 per cent.? Is not the truth of the matter that the rate of inflation next year is likely to be about 25 per cent., and that this is why the Government are so coy? They said one thing during the election campaign, and misled the public, and they naturally want to wriggle out of it now.

Mr. Ridley: Is there not a further point —that the rate of inflation of local authority expenditure, which is largely wages and interest on capital, is likely to rise by more than the national average because there are no brakes in the public sector upon wage demands and the rate of interest is escalating even faster than the rate of inflation? Is is not likely, therefore, that local authority inflation will be higher than the national average?

Mr. Channon: That is possible. Indeed, it is probable. As has been pointed out, we are entitled to have at least some bracket of what the Government believe is the likely rate of inflation. We are not asking for exactitude. It is impossible to make an accurate estimate. Perhaps the Secretary of State for Wales will address himself to that bracket. If he will not tell us, perhaps he will tell us why he will not tell us. Perhaps he will also say why one of his right hon. Friends is prepared to make an estimate in America when he is not prepared to tell the House. The House of Commons will be prepared to draw its own conclusions about the fact that Ministers are prepared to make estimates outside the House but not inside it.

The Secretary of State for Wales (Mr. John Morris): Would the hon. Gentleman care to say now what was the forecast made by the Government of which he was a member and will he tell us of the invitation then given to local authorities? Will he remind the House about that?

Mr. Channon: The right hon. and learned Gentleman knows very well that ever since then Ministers have been

attacking my right hon. and hon. Friends because that forecast was inaccurate. We are entitled, in our turn, to have some estimate from Ministers, in order that local authorities can make their preparations. We shall be very interested to learn from the right hon. and learned Gentleman tonight whether he is prepared to tell the House what his Cabinet colleague is prepared to say outside it but which he is not apparently prepared to tell the House.—[Interruption.]

Mr. Wellbeloved: The hon. Gentleman is up the creek.

Mr. Channon: The hon. Gentleman has such a very weak case that he has to go back 12 years in order to find excuses for the shocking rate increases which will be imposed by his party next year.

Mr. Wellbeloved: January 1974. Cough up.

Mr. Channon: If the hon. Gentleman will keep quiet for the remainder of my speech, I promise to read the London Government Act tonight—

Mr. Wellbeloved: Cough up.

Mr. Channon: —because it is too much.

Mr. Wellbeloved: The hon. Gentleman should get away from that point as soon as he can.

Mr. Channon: No, I shall develop it further, because I intend to deal further with the question of inflation.
We are told that the social contract means that wages should rise by no more than prices. Surely, as a minimum, the Government should ensure that where-ever any family lives in this country, next April that family should not be faced with an excessive increase in rates. The 25 per cent. average should be a 25 per cent. maximum for the increase next year.
Why was it right last year to give special domestic rate relief—the Secretary of State said in July that people would have their rates and water charges abated by a certain amount—when for next year the Government have set their faces against any form of relief for those faced with excessive rate increases, either in general rates or water charges. If it were right in principle to give relief this year, surely it is right in principle to give


similar relief next year, in order to make sure that no one has to face more than, say, a 25 per cent. increase in rates, about which the right hon. Gentleman has been talking.
I come to the £350 million in the Rate Support Grant (Increase) Order. Why cannot that be used, at least in some measure, to relieve many people, particularly those in London and in the South-East, from the extra burden of the rate increases this year? That is a very important matter which the Government ought to make clear. They must say why they are not prepared to give that particular relief next year.
I welcome the fact that the right hon. Gentleman has said that effective means need to be employed to ensure that local councils do not spend beyond the limits approved for the purposes of the rate support grant. I recognise that the Chancellor of the Exchequer has said that local government spending now amounts to 30 per cent. of public spending as a whole. It is very important to do what the Secretary of State has done. I welcome his decision regarding staff levels and the monitoring arrangements which he has announced with the rate support grant. It is impossible for the House to allow that sort of thing to continue in our present economic circumstances.
I welcome also the fact that the right hon. Gentleman has said that he will try to persuade his colleagues not to go around asking local authorities to increase expenditure at a time when they are being asked to hold expenditure steady. I draw the right hon. Gentleman's attention to a letter sent by the Secretary of State for Prices and Consumer Protection to the Consumers Association on 23rd November encouraging the association to expand consumer advice services. I notice however, from the White Paper, that there is to be no money spent on consumer advice services during the coming year.
These are very serious problems. It is intolerable that one lot of Ministers should be telling people to spend more and another lot of Ministers should be telling local authorities to keep their spending under control.
I am also told that the Secretary of State for Education and Science has said

that education in England and Wales is likely to expand by 10 per cent. over the next two years. Is that compatible with the rate support grant which we are debating?
In the rate support grant we see serious implications for local services, which local authorities will have to face during the coming year. They are told that there are to be no improvements in the standard of services, in personal social services and in libraries. They are told that there are to be no improvements in existing concessionary fare schemes and no new concessionary fare schemes. They are told that direct labour organisations are to be cut, and that bus fares are to rise by at least the amount necessary to keep pace with the increasing costs affecting bus services. Those authorities which have not increased fares of late are told that they should consider what additional increases are necessary to recover some of the lost ground.
The Secretary of State is not to implement the Control of Pollution Act and local authorities are to put up charges for recreational facilities by about 30 per cent. There is to be no further work even on the improvement of public conveniences, including conversion work for the handicapped. There will be no further growth in the prevention of air pollution and there will be a halt to the recruitment of planning staff and other such matters. That is scarcely what we were told during the General Election.
The Government were elected on a basis of false facts about inflation and by trying to imply that everything was reasonably well in the economy. Now, a few weeks later, they have produced proposals of this kind. We agree with the proposals in the White Paper, but when we were trying to tell the country how serious the situation was the Government did not give us much help. At a time when the Secretary of State is quite rightly calling for frugality in the rate support grant, other expensive schemes appear to be untouched by Government economies.
What is meant by
deferment of land acquisition for planning purposes"?
Does that mean that the Government will go ahead with the land nationalisation Bill, or not? How can they defer land


acquisition for planning purposes in one breath and in another tell the local authorities to spend hundreds of millions in buying up development land? We are told that there is to be a halt to the recruitment of planning staff. How can that be reconciled with the plans for land nationalisation when the Minister for Local Government told a professional association only a month or so ago that is was essential that professional staff of the necessary calibre should be found in adequate numbers to implement the scheme? How can that be reconciled with the rate suport grant when local authorities are told that they must halt recruitment of planning staff?
At the same time we can all look at examples of extravagant local authority expenditure. Many hon. Members will have seen the articles in the Observer in the last three weeks about expenditure in some of the London boroughs which detailed indiscriminate redevelopment, the buying up of properties wholesale and vast expenditure being incurred. Why is there no reference to this in connection with the rate support grant? Why have local authorities not been told to curtail that expenditure? In a Written Answer on 20th November we learned of the amount of money being spent on acquiring dwellings in Greater London. The most expensive example was Camden which in the last six months has spent no less than £14 million on acquiring houses. [Interruption.]

Mrs. Elaine Kellett-Bowman: Look at its rate arrears.

Mr. Channon: If the right hon. Gentleman is to call a halt, as he is right to do in the national interest, to some desirable projects, why not call a halt to some of the other extravagances in local government?

Mr. Crosland: I am sure that the hon. Gentleman is aware that what he is saying has nothing to do with the rate support grant. The cost of municipal acquisitions in Camden, for example, does not come within the rate support grant.

Mr. Channon: I am well aware of that, but when local authorities are asked to economise, and when in the national interest there must be economies in all facets of our national life, it is only right

to extend the cuts to include some of the dogma of the Labour Party.
As I tried to point out in the earlier debate on the rates, some experts have put the cost of land nationalisation in the initial years at £500 million a year. I accept that that estimate may be far too high, but the Secretary of State should tell us how much local authorities will be expected to spend under this heading in the next few years, and why economies are not proposed there, too.
We are here concerned with the immediate year ahead, but the rate support grant must be looked at within the context of the whole rating system. The right hon. Gentleman referred to that and to the Layfield Committee. Certainly my right hon. and hon. Friends believe that the rating system has now become so unfair that our ultimate aim must be to abolish household rates within the lifetime of this Parliament. I hope that that ambition is shared on both sides of the House. Meantime it is the Government's duty to start working towards it, and that is what I would have hoped to see in this rate support grant.
For that reason the Secretary of State should have done certain things, I welcome the increased help he has given to local authorities, but I would have urged the Government—I still do—to take immediate action from next April to ensure that no families are faced with massive rate increases. That should be the first step towards total abolition of household rates. It is unfair, with an average increase of 25 per cent., that so many people will have to pay double, if not more than double, that average, especially since some of them paid a very heavy rate increase this year as well. There should be immediate relief next year for small shopkeepers and traders who face so much extra expense not only in rates but in the additional burden imposed on the self-employed.
Local councils should not exceed approved spending limits for grant purposes because to do so will only mean heavier burdens for ratepayers. The nation as a whole must get its priorities right by dropping costly and harmful schemes like those I have mentioned. This is no time for extravagance. The Government should have made a start by making sure that ratepayers next year, including small traders, get a fair deal. If the


Layfield Committee were to report at the end of next year and recommend abolition of the rating system, assuming that the Government could be persuaded to accept those recommendations, no start could be made on winding up the rating system even within a year. That is far too long a time scale for a problem which has now become so urgent. The urgency arises because of the rate of inflation and the far too heavy burden of rates which rests on domestic ratepayers and small shopkeepers.
The right hon. Gentleman has given some help to them in his assistance to local authorities, and that is very welcome. But it is welcome only up to a point because I believe that the opportunity has been missed of making sure that no one has to pay more than a 25 per cent. increase next April. The opportunity has been missed, too, of taking steps towards winding up the domestic rating system. The people now believe, and rightly, that the days of that system are numbered and should come to an end soon.

5.8 p.m.

Mr. Arthur Blenkinsop: I am amazed at the temerity of the speech of the hon. Member for Southend, West (Mr. Channon). It is not surprising that all those who bore a direct responsibility for the totally incoherent situation that was left to this administration by the Conservative Government have been swept away. We are left with those who had only an indirect responsibility for that mess. From the outset we should realise that those were the people who tried to shackle us— and in some cases were successful—to enormous public expenditure on projects such as Concorde and Maplin. All these were imposed upon us, and only with the greatest difficulty are we extricating ourselves from some of them.
That is not to mention the whole range of the effects of local government reorganisation. It may well be true that London is still suffering after some years from the effects of the reorganisation there. The effects of the recent reorganisation in the rest of the country are marked. In planning we have nearly three times the staffing requirement for the same amount of work, imposed not as a result of a sane determination of what should be done but because of a cheap

and unsatisfactory political compromise secured by the Opposition when in power. It is not cheap in money terms, but it is a nasty, unpleasant compromise that brought neither value nor profit to anyone. It amazes me that any Conservative right hon. or hon. Member dares to speak on the issue.
I welcome the realistic appraisal of the situation by my right hon. Friend the Secretary of State. Local authorities and domestic consumers throughout the country must be brought face to face with a grim situation. But I regret my right hon. Friend's determination to exclude any hint of humour. I hope that he will not exclude it from future speeches, for we should all be the losers if he did.
The situation today is in marked contrast to the situation that the House and local government were in a year ago, when local authorities did not know where they were. They were still struggling to find out right up until February. We were in the middle of the first of our two elections this year before a final answer came. That was based on a complete misreading of the circumstances, to put it at its mildest—a miscalculation, if not worse. It was a situation of the greatest difficulty. I am glad that we now have at least a relatively clear picture of where we are, so that the local authorities have a reasonable base on which to work, in spite of all the changing circumstances that they, like all the rest of us, have to face.
I hope that my right hon. Friend recognises, as most Labour Members do, that local government spending is perhaps the best way to deal with the serious problem of the low-income earner. All our efforts to that end by way of concentration on the wage problems of the lower paid are doomed to little success. Attempting to maintain and gradually to improve the level of the public services is the way to make the biggest contribution to the lowest-paid, those in our community who are in greatest difficulty. Therefore, I welcome even the modest concession that my right hon. Friend has made to seek to ensure a slightly bigger rate of increase for local government than is prophesied for the community as a whole. That is a correct principle.
I also welcome the fact that we have faced up to the need to make a greater


percentage rate grant this time than ever before. But let us not doubt the difficulties that many authorities will have to face all the same. They include, in spite of all the efforts already made, the problems of many of our urban areas, which still face a difficult situation. I hope that within the very constrained limits of the order there will be whatever flexibilities are possible in, for example, staffing. It is all very well to say that we cannot afford further general increases in staffing. We must remember that some authorities start from an inadequate position, that some are worse affected by local government reorganisation than others.
I welcome what I understood my right hon. Friend to say in answer to an intervention, that, as has happened in the past, awards in course of preparation, such as those to the teachers and some local government manual staff, will be met, although we all hope that they will be moderated to every possible extent and that they will not damage the financial position of our local authorities. That is a matter of deep concern to many of us, particularly in the urban areas that are impelled to employ a high proportion of staff, having little control over the numbers they must employ.
My right hon. Friend has given a figure of an average 25 per cent. increase in rates. To give any average is a little dangerous, because none of us can be sure about the situation ahead, and averages cover a multitude of varied circumstances. Many of us represent areas that, although already among the most heavily rated, will have to face further sharp increases. When Conservative Members talk of the exceptionally high increases that may still occur in some areas, we must consider what base they are talking about. A relatively big increase imposed upon a fairly low base is by no means as heavy a burden on the people in the area concerned as a smaller increase upon a high base.
I agree with those who have referred to the difficulties of some small commercial firms and shops. The matter must be examined in the wider review by the Layfield Committee. Especially in development areas and other areas under heavy pressure, many firms are near the margin, and need any help that can be offered.
Wider matters have been raised, but I do not propose to deal with questions that are essentially for the Layfield Committee. I was amused by the new enthusiasm of some Conservative Members for the abolition of the domestic rate. At one time my party was committed to some extent to the concept of moving education expenditure on to the Exchequer. I would still welcome consideration of that possibility. But that is more a matter for the Layfield Committee than for us today.
In a narrower context, we must be prepared to consider possibly pegging the domestic element in the rates as well as conceivably thinking of the resources element being made self-financing, and concentrate more on the rationalisation of the needs element as a main basis for assistance in the future. It is in considering such matters that we can make the biggest contribution. There is wide recognition of the importance of this in the AMA and other organisations.
I cannot believe that anyone is likely to divide the House on these proposals. They have received a broad welcome, within the established limits imposed on all of us. I congratulate my right hon. Friend and all who have been concerned in working out the arrangements on the fact that they have been able to bring them to the House at a reasonable time of the year and so help local authorities to face the severe challenge that lies ahead for them.

5.21 p.m.

Mr. David Price: I will not comment on the earlier part of the speech by the hon. Member for South Shields (Mr. Blenkinsop) in which his remarks were more of the nature of a political speech, but the latter part of his speech was most interesting. I would be happy to discuss with him his points on education because I believe that we are in total agreement in this respect.
I intend to address my remarks as strictly as I can to the two general rate support grant orders. These orders may seem to some people, particularly those outside the House, to be dull and technical. I am sure that the House would agree that Schedule 1 of the No. 2 order reads like a Christmas quiz for senior wranglers. However, the two orders are very important and have a direct bearing upon the conditions which people


will experience in the next 18 months. They are also important because large sums of money are involved—over £8,000 million of anticipated expenditure in the coming year.
I need hardly remind the House that we have a traditional duty to examine public expenditure, and that duty is not removed because we are in this case concerned with local authority public expenditure. I do not believe that one debate across the Floor of the House is the best way to consider many of the complicated figures involved in this subject. I say this in no hostile sense either to the Government or to the local authorities involved. But we must try to devise a different parliamentary technique for examining these problems.
I would hesitate to detain the House in discussing some of the formulae in the orders. We have, frankly, to accept them in this sort of debate; but if we had, say, a Select Committee, or an Estimates Committee, for this purpose, the various factors of expenditure could be gone into in greater detail. I say this in an entirely constructive, not negative, spirit.
The trend in local government expenditure represents an alarming situation. Let us remind ourselves of the figures in the orders. In November 1973 the relevant expenditure of local authorities was deemed to be £5,670 million, at November 1973 prices. Now, a year later, we are talking about relevant anticipated expenditure for the ensuing year to the tune of £8,170 million. That is an increase of £2,499 million in one year, which I calculate to be a 44 per cent. increase. The Secretary of State has said, and it is in writing, that there is to be an increase in real resources of only 4 per cent. The hon. Member for South Shields was worried that in particular services the increase in resources would not be sufficient for the needs of his constituents.
The paper figure here is an increase of 44 per cent. I find it difficult to work this out and I would be grateful for assistance on this from the Government Front Bench. The cost of living index has gone up by about 17 per cent., and it is possible to devise cost indices which may give slightly higher figures. Let us say therefore that the rise was 20 per cent. If we calculate inflation at 20 per cent. on the 1974–75 figures, we reach

a total of £6,804 million. If we add a 4 per cent. increase in real resources on to the adjusted figure, which is the Secretary of State's figure, we arrive at a total of £7,076 million, as against £8,170 million.
I ask the Secretary of State to say how one accounts for the missing figure which, in round terms, is £1,000 million. Is it the case that particular factors of input into local government expenditure have undergone a far greater rate of increase than has been the generality that appears in the cost of living index? This is very important when we are considering next year which, we must all admit, shows every sign of being as inflationary as last year. I would be grateful for the Secretary of State's advice on this point—

Mr. Tomlinsos: Mr. Tomlinsos rose—

Mr. Price: I am afraid that I cannot give way to the hon. Gentleman. This is a complicated argument. I do not want to lose the trend nor do I want to detain the House too long.
If we look at the breakdown of the relevant expenditures as it appears in both this year's and last year's White Papers, we find, for instance, that education expenditure, including school meals and milk, goes up by 32 per cent. Does this figure entirely include the estimated increase involved in implementing the Houghton Report recommendations? I gathered from the Secretary of State that it does, but I would like the point confirmed. On personal services we find that the increase is 55 per cent., on local transport finance it is 107 per cent.—I appreciate that in this case there is a lack of comparability, due to the new method of grant treatment. On recreation, parks and baths the increase is 67 per cent., on town and country planning 47 per cent., on administration 42 per cent., on housing 90 per cent. and on miscellaneous services 36 per cent.
I do not want to discuss the policy decisions that lie behind the make-up of these different increases, but simply to compare the expenditure for the two years. I suggest that there is much here that needs explaining, but I fear that the normal sort of debate across the Floor of the House is not the best parliamentary manner in which to examine these matters.
I am left with the point made by some of my hon. Friends and by the hon. Member for Cornwall, North (Mr. Pardoe) regarding the range of likely rates of inflation. I do not believe that it is excessively partisan or prejudiced to say that this is an essential input into any local authority's calculations for the ensuing year. It is also essential that we should have information on this so as to examine the relevance of both the anticipated expenditure and the anticipated aggregate grants proposed by the Government.
I do not approach any of these increases in a vindictive sense. I draw these matters to the attention of the House because they illustrate the dilemma facing us all in this highly inflationary age. I put a simple question to the Government. How do we as a House of Commons, how do the Government, so control public expenditure—one might add that the same thing applies to our private lives but that is outwith our debate—in an inflationary age as to ensure a fair deal for the taxpayer without causing serious harm to important public services and injustice to the staffs concerned? That seems to be the dilemma facing us all.
The situation is far too serious to use this limited occasion to make minor points of a party nature. The General Election is behind us for the moment. [HON. MEMBERS: "Oh."] There are, however, obviously some hon. Members who prefer living that way. I do not. The effect upon ratepayers, domestic and commercial, will be severe. It would be churlish of us not to acknowledge the big increase in the aggregate Exchequer grant which the Secretary of State has presented—an increase from 60·5 per cent. to 66·5 per cent. Nevertheless the ratepayer will still have to face a hefty increase. Paragraph 15 of the supporting White Paper says:
the average increase in domestic rates next April could be kept to some 25 per cent. though there will be wide variations around this average.
We know that averages can be dangerous. In this sort of situation they ignore the big increases.
In my county of Hampshire the county rate rose last year by 54 per cent. A further 25 per cent. increase would be truly punishing. It would mean that in five years the county rate had increased

by 92·5 per cent. We know from the Department that the national average domestic rate increase last year was one-third. It will be a quarter this year. A simple calculation shows that over two years the average increase in the domestic rate will be 60 per cent. If in two years we had a 60 per cent. increase in the basic rate of income tax we would be having riots. This is the scale of the rate increase.
It proves beyond any lingering shadow of doubt that the rates are a totally inadequate tax for financing modern local government. They are grossly unfair. I can say this because earlier this year I produced a scheme showing how we could get rid of the rating system completely. I presented it to my constituents. Clearly this is not a matter to go into now. We have the Layfield Committee at work. So serious is the situation for the ratepayer that I had hoped that the Secretary of State would have gone the whole way and put the entire increase on the tax payer.
I have been advocating an increase in national taxation to prevent any further rates increases since before the General Election. No one can say that I was afraid to make the suggestion before the General Election. I would point out that the rates, particularly the domestic rates, are imposed in a way which takes little account of the ability to pay. Further, the rates are not buoyant, to use the fiscal jargon. They do not keep pace with the growth of local authority services nor have they the inherent growth of revenue which we get with income tax. We are seeing that clearly in these orders.
Further, ratepayers and non-ratepayers alike are entitled to make use of the services offered by a local authority but only the ratepayers pay any local tax. With national taxation everyone pays. This is an important difference. It is difficult not to reach the conclusion that the rate position is punishing for all ratepayers, whether they are domestic ratepayers or people such as small shopkeepers or independent professional persons—anyone from a doctor to a chiropodist to a hairdresser. The Secretary of State has made a mistake in not going the whole way and holding the line until the Layfield Committee reports. I conclude with a thought from that great French statesman


of the 17th century, Jean Baptiste Colbert, who once remarked that:
The art of taxation consists of so plucking the goose as to obtain the largest amount of feathers with the least amount of hissing.
By that standard the rates are a very bad tax and the hissing this coming year will, I suggest, be right terrible to experience. I warn the House of that now.

5.37 p.m.

Mr. Frank Hatton: I have listened with interest to the speech by the hon. Member for East-leigh (Mr. Price), in particular his references to the gross unfairnesses in the rating system. That is a point to which I shall return later.
I congratulate my right hon. Friend on what he has done to help local authorities. These orders will be widely welcomed. Many chairmen of finance committees, as they prepare to levy their rates in the next few months, will be grateful to him for the action he has taken. The leaders of local authority opinion at national level who have been involved in these rate support grant negotiations have warmly welcomed the decisions arrived at.
My authority of Manchester has a population which has steadily declined since the last war. It is an area of extreme social deprivation. As a result of the social needs of the city, we have been big spenders, particularly on our education and social budgets. I believe that that is right. I must express concern about the limitation on certain spending that will have to take place in the next few years. It is the poorest members of the community who benefit most from education and social service expenditure. I would always defend such expenditure.
The total rateable value of the city of Manchester has lacked buoyancy because new development has been largely offset by demolition. That has been one of the major problems of many of our large urban areas. The burden on the ratepayer has mounted steadily until in 1973–74 the city had the highest rate levy of any authority in England and Wales.
Many of us came to the conclusion long ago that the rating system was a totally unsatisfactory way of meeting the demands of local government, but we were a lone voice at that time. There was

no support from the other political parties. Many desirable residential areas surrounding the city lived on the back of the city. That is not unique. Examples can be found in other parts of the country. Local government reorganisation changed all that. It made a vast difference, and I welcome the new-found unanimity in the wish to reconsider the rating system.
It was a major disaster when the great pacemakers of local government, the big cities, were destroyed almost overnight. Chief officers of local authorities such as Birmingham, Liverpool and Manchester who had been able to solve major problems by crossing the corridors of the town hall could do so no longer when the new water and health authorities took over. These matters will have to be seriously reconsidered if local government is again to be as local and progressive as it was.
Many of the great achievements of which the nation can be proud are to be found in local government. I am proud that Manchester has built and maintained the finest municipal airport in the country. That is a great credit to the local authority, and one can find examples of that nature throughout the land.
The country's difficult economic circumstances will have grave implications for local authority services. During my 20 years' membership of the Manchester City Council my major interest was education, but today I want to refer to housing. According to the order, local authorities will be unable to increase the standards of management and maintenance of their housing stock in 1975–76. My hon. Friend the Member for South Shields said that he hoped there would be some degree of flexibility here, and I agree with him.
Manchester has had to demolish about 80,000 unfit houses. One reason for that was the lack of adequate maintenance over many years. Today the local authority housing stock is about 100,000 units of housing accommodation. One of the greatest tragedies that could befall any city would be to allow its housing stock to become unfit because of lack of money for management and maintenance. Much of our new development in housing has created major management problems. To solve those problems we have to move


forward much more quickly in terms of expenditure.
Although we regret that the order contains serious implications for some of our services, at the end of the day those who work in local government will warmly welcome what my right hon. Friend has done to assist them in the many tasks they face in the years ahead.

5.45 p.m.

Mr. John Pardoe: We are, as I think all hon. and right hon. Members recognise, debating one of the saddest subjects that comes our way— the rates. The Secretary of State was fully entitled to say that this was the largest rate support grant ever when he spoke of the 66½ per cent. of relevant expenditure which the Government will meet and the £5,434 million. But ratepayers are also entitled to ask why, in spite of the grant, they are paying the highest rates ever. That is what the debate is about, and it is that question that we must try to answer.
If the answer is thoroughly unsatisfactory, both to Government and Opposition, as it may well be, we should go on to decide what to do about it. It would be easy for the debate to degenerate into a series of personal memoranda to the Layfield Committee. It is great fun to indulge in discovering new ways of paying the bill, but I do not share the enthusiasm of some right hon. and hon. Members, notably the Conservative Front Bench, who seem to believe that if we take the burden off the rates it will all be absolutely splendid. I suggest that, wherever we place it, the additional burden will simply destroy respect for some other form of taxation.
The rating system is out of date and unfair. It was not quite true for the hon. Member for Manchester, Moss Side (Mr. Hatton) to say that other political parties had not said that in the past. It was the Labour Government which set up the Redcliffe-Maud Commission, specifically leaving out of its terms of reference the question of local government finance. It would still have been possible for the commission to consider aspects of local government finance had it been given evidence on the subject, but, of the three political parties, only the Liberals gave evidence, a considerable part of which was concerned with the necessity for the

reorganisation of local government finance.
The rating system is out of date and unfair. Any tax becomes out of date and unfair if too great a burden is placed upon it. We had best leave the Layfield Committee to consider how best to pay the bill, but we should do well in this debate to consider whether parts of the bill should be paid at all.
Local government expenditure has risen rapidly. Thirty years ago it was one-twentieth of the GNP, now it is one-tenth. For twenty years it has been growing at least twice as fast as the national income. In a brief to hon. and right hon. Members for this debate, the Association of Metropolitan Authorities said:
Reference is also frequently made to the growth rate of local authority expenditure being excessive. Again, the facts do not support this suggestion, for in the last 10 years the average rate of growth at constant prices has been 4½7 per cent.—not excessive when the development of services is taken into account.
Perhaps not, but excessive when the growth of Britain's economy is taken into account. We have not been producing the resources to pay for the increase.
New services are no doubt delightful-delightful to our constituents and sometimes even to us. Local authorities arc not entirely to blame for this plethora of new services and great increase in expenditure. The Association of Metropolitan Authorities is entitled to refer in its memorandum to
… commitments which local authorities have incurred in the development of public services in accordance with decisions taken by government.
I do not blame any one Government or any party. We are all guilty. The public is guilty. Never a day passes without one of my constituents calling on me to urge some public authority to spend more money on something. Even this year when economic realities must be obvious to everybody the nonsense goes on.
I welcome the Secretary of State's action in calling on local authorities to cut expenditure plans. Yet even in terms of rate support grant the right hon. Gentleman is underwriting an increase in local authority expenditure of 4 per cent. in real terms in 1975–76. His stated target in 1974–75 was a limit of 2½ per cent. That figure will turn out to be at least 8 per cent. therefore, what will the


new 4 per cent. target amount to in the reality of 1975–76? We must remind ourselves that the Chancellor of the Exchequer has set a limit on the growth of public expenditure of 2·75 per cent. Why should local authorities be allowed a limit of 4 per cent.?
If we ask whether this level of expenditure can be afforded in our present economic circumstances, the answer surely must be "No". But if we are to cut we shall have to change the law. There are not enough non-statutory items of expenditure to enable local authorities to cut back sufficiently to hold the rate at anything like a reasonable level. We should cut these statutory commitments rather than tell local authorities to spread the butter more thinly. Nowhere is the error of spreading resources over too wide an area of commitments demonstrated more than in education terms. Part of our so-called State education system has now reached a situation where the very word "education" is a hollow farce. This is especially true of our cities, but is also true of many rural counties.
In Cornwall this "spread thin" policy has caused past school building allocations to fall far short of the level needed to keep up with basic needs. We have not even provided roofs over heads or benches for bottoms. If the Government's allocations are anything to go by, we shall not keep up with the simple growth in the school roll in the years to come. I want more money for Cornish education. Our case is good and indeed better than most countries. If the Government cannot find the money, let them say so. Let them come to the House with a proposal to allow Cornwall to shed some of its educational commitments. It is no good our going on trying to pretend that we can afford what we cannot possibly pay for. But if we are to cut commitments, let us not do so with an axe, but with a pruning knife. And let us be careful how these cuts affect the levels of unemployment, not only in development areas but throughout the country generally.
The Secretary of State for the Environment has promised by the end of the year to issue a circular to local authorities telling them where cuts are to be made. It would be helpful if we could hear from

the Secretary of State for Wales where he thinks cuts can be made.
So far in the debate we have not had a satisfactory answer on what rate of inflation is expected. May we be told what rates of inflation the Government are planning for in their estimates of local government expenditure? What advice has the Secretary of State for the Environment given?
We know that the Conservative Government got their sums wrong and we should like some advice from the present Government, if only to say that they too have got it wrong. The Secretary of State for the Environment takes us for a bunch of mugs if he thinks we do not know what his Department has estimated. We know perfectly well. It is a leaky sieve anyway and it is not difficult to find out the answer. It is even less difficult to calculate.
The Secretary of State has given local authorities £2,000 million, £1,000 million more than they thought they would get. Local authorities are delighted, but I know the reason why the Secretary of State has given them £1,000 million more. The answer is that his Department has estimated that next year inflation will be around 30 per cent. in the provision of local authority services.
The question we then have to ask is why this riotous increase in local authority expenditure from rates has taken place. There are three main causes: greater expenditure on services, inflation, and increased administrative costs. I have already dealt briefly with the expansion of services. That is not responsible for the whole story, and at least we get some value, if not the best value, out of such an expansion. Ratepayers know that inflation is not the reason for this enormous increase either. Ratepayers in rural areas, such as the area around Launces-ton in my constituency, may be as bewildered as the Government over the real rate of inflation, but my constituents certainly know that an increase in rates of 156 per cent. in two years has not been occasioned by inflation.
Undoubtedly one of the factors has been the appalling escalation in costs brought about by the reorganisation of local government. We are dealing with one of the scandals of the age. It is a tale of two parties. One political party


while in government set up an inquiry into local government reorganisation. The other political party, at that time in opposition, had to manufacture fundamental points of disagreement, because that is the idiotic game we play. It is a story of how, with no more expertise that a man and a dog in a back room off Smith Square, a few half-baked ideas were concocted. There was then an election which resulted in a Conservative Government, and those same ill-conceived ideas were forced on local government in the name of efficiency and other assorted claptrap. It is a story of how the Department of the Environment was kept by its political masters from conducting any adequate studies into the effect of those idiotic plans on staffing and costs—for fear that such studies would have shown sound economic reasons why those proposals should not have been proceeded with at all.
We were then told that the new system of local government would be much more efficient than the old system. But it has not meant a better standard of service, lower costs, the employment of fewer people or providing better value for money. All the things that were promised have come to nothing but a riot of waste and profligacy on a scale unequalled in modern times. If we look at salaries, it is surely impossible in mathematical and logical terms to say that every administrator in local government should have increased his responsibilities. Yet I have not found one local government official who has not been able to claim an increase as a result of increased responsibility.
The only full study of the situation which has taken place has been that conducted by an interested party, namely, the Local Authority Conditions of Service Advisory Board, a body which represents staff and local authority associations. That body was set up expressly to counter criticisms that the new authorities had been prodigal in terms of staff and salaries. That body has called criticisms "ill-informed".
The biased nature of that study may be gauged by the board's own words:
A case must be prepared which will demonstrate that the allegation of recklessness on the part of local authorities is either not justified or that if, on a like for like basis, the salary bill overall for the new authorities is

demonstrably higher than that of the old authorities, then there is no good reason for it to be so.
We should mark that final sentence. The report is ingenious, not to say fanciful, in creating and inventing good reasons why salaries should have increased.
That survey showed that reorganisation had increased total salaries in local government by £54 million or 9·4 per cent. and that the number of posts had increased by 14,000 or 4·7 per cent.
The board then invented, in the way that vested interests do the world over, a marvellous excuse called "additional explainable costs"—work not previously undertaken, work previously undertaken by consultants, improved local services, work transferred from other local authorities, and other assorted smokescreens. By the time that it had done these creative statistics, it showed that there had not been any increase in posts or salaries. Far from it. Apparently we had got it wrong. The board showed that posts had decreased by 4·6 per cent. and that salaries had gone down by 2·6 per cent. However, I do not think that the public are fooled. I hope that the Government are not fooled. Certainly the House is not fooled. The figures are totally "phoney".

Mr. Nott: The hon. Gentleman was making an extremely good speech until he got to this point. Now he is on his party political platform. We must not exaggerate the costs of reorganisation in this area. The hon. Gentleman is right to criticise the salary increases. Reorganisation costs a lot of money, and much of it was a mistake. However, the hon. Gentleman's figure of £54 million for the increase in salaries must be looked at in terms of total local authority expenditure in the region of £8,000 million to £10,000 million. We should not exaggerate the situation. The hon. Gentleman is now giving an unbalanced picture in what was a very good speech.

Mr. Pardoe: I am grateful to the hon. Gentleman for saying that any part of my speech was good. That at least is something.
The trouble is that these figures are largely "phoney", because the wrong question was asked. The board was concerned to compare posts and salaries on 1st April 1973 with posts and salaries


on 1st April 1974. Yet it asked the new local authorities to list only those posts which had been filled on 1st April 1974. We all know that a large number of posts had not then been filled. Thus the situation is even worse than the figures show.
The situation in Cornwall is not entirely untypical. Before reorganisation there were 2,804 posts in local government. After reorganisation there were 3,158, an increase of 354.
I appreciate that new councils have taken on new tasks and that district councils have taken on planning. But if reorganisation had been done with real efficiency and the Government had got their plans right, the numbers taken on by the district councils for their planning departments would have been cancelled out by the numbers of people shed by the county councils in their planning departments. That has not happened.
I point out to the hon. Member for St. Ives (Mr. Nott) that Professor James, former chief planner at the Ministry of Housing and Local Government, said at a conference last week that since reorganisation local authorities' planning staff had increased by 70 per cent., not because of any new work to be done but because of overlapping and duplication in planning. That is not a party political point.
It is a fact that reorganisation has been a flop. No proper studies were made in advance in Whitehall into these costs and the effect on staffing, and control by local councillors has, alas, been inadequate.
I am delighted that the Secretary of State for Wales is to wind up the debate. I hope that, for the first time this year, he will defend the great disparity between the treatment of Wales and that of Cornwall in the domestic rate support grant. We have not had any justification yet. We have not had it because it does not exist.
The Secretary of State for the Environment was good enough to say that if only I were made Secretary of State for Cornwall all our problems would be over. I could not agree more with him. But part of our problems would be solved if the Secretary of State for Wales would take over the Cornish peninsula and

include us in the Celtic rating system That would be a start.
The reasons given for the different treatment are that Wales suffered a greater impact as a result of the reorganisation of local government and water services. The domestic rate poundage in the six new districts of Cornwall in 1974–75 ranges from 41·50p to 48·30p. In Wales the range is far lower. Only six of the 27 Welsh districts fall within that range. In Restormel the rate poundage is 48·30p. In Cardiff it is 28·l7p. In North Cornwall the rate poundage is 43·72p. In Swansea it is 35·90p.
Taking average rates per household, with which the Secretary of State for the Environment played havoc in earlier debates this year, Cornwall's range from £59·11 to £73·65. Out of 27 Welsh districts, only one comes within that range. In Restormel the rates per household are £73·65. In Radnor the figure is £33·66. In North Cornwall the rates per household are £66·35 and in Llanelli they are £33·97. I hope we shall get an answer to these figures and that the right hon. and learned Gentleman will produce the water rates as well, because they do not add to his argument either.
In England and Wales, rates and sewerage charges per household rose by 28 per cent. between 1973–74 and 1974–75. In Cornwall they rose by 65 per cent.
The effect of the withdrawal of the special domestic rate relief on Cornwall will be truly catastrophic this year. We can forget a rate increase of 25 per cent., about which the Secretary of State for the Environment told us. It will be nothing like that. People living in the rural areas around Launceston, for instance, in 1974– 75 had rates of 53·15p in the pound. There was a special relief of 13·16p. so the final rate was 39·99p. The withdrawal of the special rate relief alone means that, if there is no increase in expenditure in 1975–76, the rates will rise by 33 per cent. for those people. If for other reasons the rates rise by only the amount that the Secretary of State stated—25 per cent.—those ratepayers will pay an additional 58 per cent. increase. That is the reality of the situation. Therefore, I ask the Secretary of State for Wales to consider Cornwall's position.
Cornwall must be treated in rating terms in the same way as Wales. People


in Cornwall have suffered an identical impact as a result of the reorganisation of local government and water services. I beg the right hon. and learned Gentleman and his right hon. Friend to reconsider our case.

6.8 p.m.

Mr. Dafydd Wigley: Tempting though it may be to follow the hon. Member for Cornwall, North (Mr. Pardoe) on the path on which he started, I shall not do so, but there are some territorial ambitions that I could follow in that direction. The hon. Gentleman, no doubt, has severe problems in his area, because of the nature of the terrain, in the same way as many parts of Wales have problems. It is not entirely fair to compare parts of Cornwall with cities such as Cardiff and Swansea. Most of Cornwall is more comparable with areas in Wales like Dyfed, Powys and Gwynedd. I want to concentrate on many of the problems in those areas.
I should make clear that in putting down the amendment on the Order Paper, which we regret is not to be called, we are in no sense attacking the total funds made available for rate support next year in England and Wales. We welcome the funds that have been made available. If we introduce a certain amount of acrimony, it is on the allocation of those funds within Wales, particularly in the rural counties.
I am pleased that the Secretary of State for Wales is to wind up, because I should like to raise certain specific points with him. I should be grateful if he would answer those points and clear up what has become a topic for dispute in Wales, both publicly and privately. This subject is very serious for my constituency, so serious that we tried to raise these points at an earlier stage in the development of the grants fund. I tried to speak in the last debate but was unsuccessful. I was unsuccessful also when I tried to raise the matter on the Adjournment. I know that representatives of the Gwynedd County Council have visited London to raise these points. They will be amazed to see that the amendment has not been called.
This is not a party-political point. Much of what I have to say is supported by members of the Conservative and Liberal parties, by the Gwynedd County

Council, and, I believe, now by members of the Association of County Councils.
We all look forward to the Layfield inquiry taking place, when we shall have an opportunity to bring about once and for all the total abolition of the system of local rates and give the local authorities the maximum possible freedom to raise revenue on an equitable and progressive basis to suit their own individual localities.
Gwynedd, Dyfed and Powys are counties of large area and small population, having low income. The degree of low income is such that in the former county of Caernarvonshire the personal income before taxation was only 55 per cent. of the level in England. An Inland Revenue survey showed that 34 per cent. of the population fell into the category defined as having low incomes for tax purposes. That figure compares with 27·3 per cent. for England and Wales. Only the figure for Cornwall exceeds that. The figure for Cornwall is 34·5 per cent. There is a preponderance of low income population in rural Wales.
This is a point which the Government should always bear in mind. There is chronic rural poverty as well as urban poverty. There is chronic rural poverty in my constituency and in many parts of Wales. There are cases of real social deprivation occurring as a result of the rural poverty of these areas, and this deprivation is as great as the deprivation in many urban areas.
The effect of rate increases over the past two or three years has been staggering in my constituency, where some small businesses have had their rates increased from £180 in 1972 to £500 in 1974. The local economy does not have the capacity to absorb that sort of increase. These are the marginal businesses which will be squeezed out of existence if this trend is continued.
While income levels are so much lower, the cost of living in many respects is higher. I can give two examples. The level of water rates in my constituency has been referred to already, as has the effect of the VAT increases on petrol in rural constituencies. These are substantial elements in the cost of living, and between these increases and the trend in rates the population is being squeezed very tightly.
The burden on the local community is added to by the effects of the cost of tourism. I raised this matter in a debate in July 1974. The tourist trade brings many benefits, but it substantially increases local authority costs. Tourism brings an additional population which has to be served but which does not qualify for the grant support from the central Government.
There is the overriding factor of the sparsity of population, and I must go into that in a little more detail. The rateborne cost per head of population in Gwynedd is among the seven highest in England and Wales. In fact, four of the seven counties are in Wales. The sparsity formula in the needs element has caused much dispute recently. During the current year 1974–75, the sparsity formula was based on a figure of £3·12 per acre. In Gwynedd, which has an area of 950,000 acres, the total figure is therefore £2·98 million. That figure has been increased effectively because of the recent announcement made by the Government to raise the figure to £4·33 per acre for the current year, giving Gwynedd a total of £4·14 million. What will happen in 1975–76? The original basis of the proposed basic rate was £0·63 per acre for acreages in excess of 1·5 per head. This means that the total in respect of Gwynedd will amount to only £400,000.
I welcome the super-sparsity element which the Secretary of State has successfully introduced. That element will bring in £1·81 per acre for acreages in excess of 3 per head. That gives Gwynedd £535,000, or a total of £930,000, that is, a figure of under £1 million compared with the original £3 million forecast for 1974–75, and the revised figure of over £4 million for 1974–75. Even allowing for the damping concession, in 1975–76 we shall be more than £2 million worse off as regards this element compared with last year. The question then arises whether the damping concession will continue next year.
Ministers may say that it is unfair to take one element, and that we need to look at the complete picture. Let us do that. The original total needs element grant for Gwynedd for 1974–75 was originally put at £10·37 million. The revised figure is £14·48 million. The estimate for 1975–76, on the basis of what

we are discussing today, will be £14·59 million, which is an increase of £100,000 on the augmented figure for 1974–75.
It may be said that the resources element will help us. But the increase of the resources element from 45 per cent. to 50 per cent. will yield only £750,000.
The net effect on the people of Gwynedd will be an increase of the order of £2 million in rateborne expenditure. The effect will be an increase of 6p in the rates on the sparsity change alone. The overall increase in the rates is likely to be of the order of 40 per cent., compared with the 25 per cent. average. I realise the dangers involved in talking about averages, but I think that the formula fails because of the attempt by people who like playing the statistical game to obtain a regression formula to suit areas where the characteristics are different. We can try, with as many parameters as we wish, to obtain a line of best fit, but we shall still find points on that line which deviate substantially from the others, and that is happening, I am convinced, in the cases of Gwynedd, Dyfed and Powys in rural Wales.

Mr. Wyn Roberts: Is the hon. Gentleman aware that the Association of County Councils has declared its view that this change, in conjunction with the operation of the formula, is too great as regards Gwynedd and that it is prepared to reopen negotiations with the Government? Is he not much impressed by the view taken by the association?

Mr. Wigley: Yes. I am grateful to the hon. Member for Conway (Mr. Roberts) for bringing up that point. I was about to touch on that subject to substantiate the argument which I put forward. This argument, which was put forward neither on a party-political basis nor only in connection with Gwynedd County Council, has now been accepted.
Let me look at the overall effect that the grant changes will have in respect of Gwynedd. The increase in total grants for Gwynedd for next year will be 43·6 per cent., compared with an average of 52 per cent. for England and Wales. Assuming a 4 per cent. increase in average service, that implies either a substantial decrease in the level of services in Gwynedd or a substantial cost to the ratepayer in Gwynedd. Compared with the figure of 43·6 per cent. in respect of Gwynedd, the


figure for Dyfed is 43·4 per cent., and that for Powys is 39 per cent.
Rural counties, whose populations have low incomes, will suffer because of the treatment of grants for the next year. This is not a matter merely for my concern. It is a matter of concern to the Association of County Councils which has prepared a document as a background for today's debate entitled "View of the Association".
In stating that it recognises that the total amount of money provided by the Government is reasonable, the Association's document continues:
The Association have, nevertheless, made representations to the Secretary of State that the formula proposed for the distribution of the grant will again divert funds from the non-metropolitan areas to London and the other metropolitan areas … Whilst realising that if this is Government policy they have no alternative but to accept it, they consider that the formula acts too sharply upon some of the non-metropolitan counties. They have there fore pleaded for some form of safety net, which will ensure that no county suffers too harshly, and they have instanced the Welsh counties as some of the most disadvantaged counties in this respect. On the basis of the best information available, the Association believe that even though only half the needs element total is to be distributed by way of the new formula, at least six member counties, including two Welsh counties, will have an alteration of minus more than 5 per cent. in their share of the total Rate Support Grant in 1975–76 when compared with the current year.
The Association consider this to be too great a rate of change, and they would be most willing to reopen discussions with the Government to ensure that this reasonable grant settlement is not marred by the lack of appreciation of the dangers of a too rigid and theoretical approach to the new distribution formula.
I ask the Government to look at this matter again. Will the Minister say categorically that it is his policy, as the ACC memorandum suggests, to shift resources relatively from non-metropolitan areas to London and other city areas? Will he acknowledge the understandable and justified fears which have been expressed in rural counties in Wales, rather than brush them aside saying that they are without foundation? Even at this late stage, will he consider the introduction of a safety net to ensure that no county has an increase of less than 48 per cent. in grant allocation? Finally, will he accept the

invitation of the Association of County Councils to reopen discussions with the Government as a matter of urgency?
These are not trifling worries. They are of the gravest concern to areas where the economy is depressed and where there is little room for adding yet further burdens on a population whose incomes are excessively low on a United Kingdom and a European basis. It is the public services in my area and in rural Wales generally which will suffer if there is no modification in the Government's proposals. If that happens, it will be the weakest and poorest members of the community who will suffer. That is why we tabled our amendment and why we hope that this Government, of all people, will respond to the case that has been made and modify their proposals for next year to safeguard the interests of rural areas.

6.23 p.m.

Mr. John Cartwright: I hope that hon. Members who have spoken already will forgive me if I do not follow them through the intricacies of Celtic rating.
I congratulate the Government and my right hon. Friend the Secretary of State for the timing of the rate support grant settlement. This time last year, I was leading a London borough council, and I well remember the frustration and agony of trying to go through the rate fixing operation without knowing the level of rate support grant. It was rather like trying to make an omelette without eggs.
I congratulate my right hon. Friend also on the degree of realism and understanding of the problems of local government that he has shown in this settlement, a much greater sense of realism than we had shown by the previous Government in their settlement earlier this year. I can remember the degree of incredulity which swept through local government when we were told by the Conservative administration that we should rate on the basis of a 9 per cent. rate of inflation.
That same incredulity went through all the local authority associations. I shall, if I may, quote the reaction of the then County Councils Association, which is not known for its revolutionary fervour, especially with a Conservative Government in office. The final account of the


negotiations produced by the association said:
The County Councils Association queried the Government's estimates of the rate of inflation which appeared to assume that the effect of pay and price increases would be less than in the previous year. This seemed unduly optimistic … If local authorities were to rate on the basis of the Government's assumptions they would be in trouble.
That is exactly what happened. There was a considerable amount of trouble, and the increase order now before us will rescue a great many local authorities from that trouble. We should pay tribute on that account.
Like the hon. Member for Cornwall, North (Mr. Pardoe), I am interested in the circular which the Secretary of State has promised offering advice to local authorities on ways in which their spending programmes for the coming year may be reduced. I hope that it will be more realistic than Circular 19/74 produced by the previous administration, which urged us to cut the growth in expenditure on social work staff, home helps, day centres, meals and holidays. That seemed to indicate a totally false sense of priorities when making cuts. It went on to call for less frequent collections of refuse and a reduction in the hours of opening of recreational facilities. I hope that my right hon. Friend's circular will be more realistic and more understanding of what goes on in local government.
I turn to the position in London, which much exercised the mind of the hon. Member for Southend, West (Mr. Channon). We have heard a great deal of concern expressed about the problems of rural Wales. It is reasonable, therefore, to comment on the problems of London.
My right hon. Friend recognised that although he had gone some way to meeting London's case, London might not be totally satisfied, and that is the situation. When we talk of the rate support grant for 1974–75 meeting 60·5 per cent. of relevant spending, we raise a hollow laugh in London, where the figure of just over 35 per cent. of relevant expenditure is met by rate support grant. Although the increase in the coming year will be up to 66·5 per cent. in the country as a whole, it will still not rise very much beyond 35 per cent. in London. This is despite the fact that it is generally agreed that

the costs of local authority services in London are much higher than the average in the country.
These additional costs have been identified and are now widely accepted. They include the additional costs of the police. In London we have more than twice as many policemen per 1,000 of population than the national average, and we need them. There are additional problems of debt charges arising from higher land and building costs in Greater London. There are higher pay levels and the problem of London weighting. At 1974 prices, these additional costs are estimated to be running at £300 million a year in Greater London.
There is an attitude which says that, although London has all these additional costs, it is wealthy enough to absorb them. However, not all London streets are paved with gold. Not all London ratepayers live in penthouse suites in the West End and drive shiny limousines. There is ample evidence of as much real poverty in parts of Greater London as there is to be found in any other part of the country. This is to be seen in the higher social service case loads in Greater London,
Looking at the various aspects of the social service case load, we see that there are more than half as many more children in care in Greater London than the average in England and Wales. The incidence of physical handicap in the elderly is twice as high in Greater London. Illegitimate births are a third higher in London than the national average. The incidence of homeless families is more than three time as high than in the rest of the country. That is why the problems of boroughs such as Camden result in their having to undertake expensive housing acquisitions. As for education, 12 per cent. of all the pupils in London schools are immigrant children, compared with a national average of less than 2 per cent. This shows that London's needs are singularly high.
Turning to the needs element of rate support grant, we all understand the attempt to measure needs objectively and to try to equalise spending per head on rate fund services as between different authorities. But London's spending is excluded from the formula on which the needs element is calculated. We in


London suspect that this is because, if London were included, a further £150 million of support would come to London —purely as a result of including London's higher spending in the calculation.
The excuse given for not including London's higher costs is that London has very much higher rateable resources. This point was made in the report of the grants working party, which said:
Most members consider that London's exceptional rateable resources outweigh London's exceptional spending needs.
In other words, it is argued that because we have high rateable values in London these additional costs can be painlessly absorbed.
It is fairly clear that the much higher rateable values we have in London reflect scarcity in housing rather than ability to pay. For example, the rateable value of a three-bedroom Parker Morris house in London will be substantially higher than that of an identical property in any other part of England or Wales. It will be half as much again as an identical house in Merseyside or Kent, and two-and-a-half times as high as an identical property in some parts of rural Wales.
The impact of a much higher level of rateable values on the London ratepayer is very marked. Londoners pay, on average, 50 per cent. more in rates than the average for the rest of the country despite the fact that household incomes in London are nothing like that much higher than the average in the rest of the country. Recent evidence suggests that household incomes in London are not much more than 20 per cent. higher than the average for the rest of the country.
The argument which is so readily trotted out is that rateable value is an acceptable test of resources. Tonight we are all quoting memoranda from the local authority associations, and a memorandum from the Association of Metropolitan Authorities challenges this clearly. It says:
High rateable values are no measure of ability to pay or of resources.
I agree with my hon. Friend the Member for South Shields (Mr. Blenkinsop) that what really matters is the actual sums paid in rates, and here we find that London does not come out very happily.

The Times of 6th December had a headline which was very chilling to London ratepayers:
London householders head the ratepayers league".
That is one league table which London would be happy to be down in. It shows that in the current financial year the average rate paid in London is £95 a year, compared with £72 in metropolitan districts, £75 in non-metropolitan districts, and £37 in Wales, which indicates that sparsity has some compensations. This does not include additional relief given by the Government last summer, which widens the gap still further, and it seems obvious that the rate support grant order for 1975–76 now before the House will again widen the gap between London and the rest of the country.
The actual figures of average rates paid in certain London boroughs make the situation even more clear. In Camden, for example, in the current year the average rate paid is £140. In Haringey the average is £131. Even in Tower Hamlets, deep in the East End of London, the rate of the average property is £103 per year. Equating that with average household income, we find that the. average household in Camden will pay something like 9 per cent. of income in rates. For Haringey the figure is 8 per cent., and in Tower Hamlets almost 7 per cent. of the average household income is going in rate payments.
We recognise that the Government have moved some way to meet the problem of London. The weighting factor for 1974–75 is increased from 3 per cent. to 12 per cent., which is very much welcomed, giving an extra £36 million against the problem of the London weighting settlement. It is a fairly small figure compared with the additional extra costs in London already identified, but all contributions are gratefully received in London at the present time. But our joy was less than unconfined when we found that the weighting figure for 1975– 76 is to be dropped back to 8 per cent., which means less help on that score than in the current year.
Again, to quote the Association of Metropolitan Authorities:
 London's needs entitlement is to be enhanced by a higher weighting but this is still.


not large enough to compensate for London's exceptional spending needs, which are not adequately recognised in the distribution of the needs element grant.
I suggest that when the great metropolitan authorities such as Manchester, Merseyside, the West Midlands and Tyneside, are prepared to do battle for London's case, it must be a very good case indeed.
My right hon. Friend the Secretary of State recognised in his opening speech that London's rate increases will be well above the kind of guide level of 25 per cent. for which he was aiming. The suggestion I have heard—not from borough leaders who may be thought to be a little unsatisfactory as a source of information in this respect but from borough treasurers who are sober, sensible people not given to exaggeration—as their assessment of average rate increase in London in the coming year is of the order of 50 per cent., and some will be substantially above that.
This is not the result of extravagance. A great many London authorities are already making proposals for cutting services, reducing standards and raising charges to prevent still more frightening increases. A great many are already deciding to carry out staff reductions in the sense that vacancies are not to be filled. That is a worrying factor when we are talking of skilled professional officers such as public health inspectors, weights and measures staff and, most important of all, social workers.
In talking of a 50 per cent. increase for many London ratepayers, we are talking about £1 a week, and probably more than that in some London boroughs. Bearing in mind that a substantial proportion of London ratepayers are also council tenants who will face rent increases later in the year, we see the size of the problem facing London.
What is said by London local government is that there has to be a more equitable distribution of resources for London. It can be done in one of three ways: by bringing London's additional expenditure into the RSG formula; by increasing substantially the percentage addition for London's higher costs; or, more attractively, by accepting that London is a special area with particular problems which do not fit into the rest of the formula and dealing with it

separately from the rest of the country, with a separate allocation of national resources.
We shall be arguing this case before the Layfield Committee. I accept that it may be late in the day to make additional help available for London, although it was done last summer in other parts of the country, which were, in our opinion, rather less deserving, but it is fair to make clear to my right hon. Friend that both sides of London local government are united in their determination to try to secure a greater measure of justice for London ratepayers, and that determination will be substantially strengthened by the kind of rate increases we are now facing in Greater London.

ROYAL ASSENT

Mr. Deputy Speaker: I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Acts and the following Measure passed under the provisions of the Church of England Assembly (Powers) Act 1919:

1. Consolidated Fund (No. 4) Act 1974.
2. Social Security Amendment Act 1974.
3. The Green, Aberdeen (Boots the Chemist Limited) Order Confirmation Act 1974.
4. Torquay Market Act 1974.

Church of England (Worship and Doctrine) Measure 1974.

RATE SUPPORT GRANT

Question again proposed.

6.39 p.m.

Mr. Geoffrey Finsberg: I should like to follow the hon. Member for Woolwich, East (Mr. Cartwright) and say how sorry I was that the Secretary of State for the Environment was not here when he started speaking, because the hon. Member was one of the few Londoners likely to congratulate the Secretary of State on what he has done for the London ratepayer this year.
I fear that the hon. Member for Woolwich, East has not fully grasped the fact that we are in the middle of a grave economic crisis and that no local authority service can be regarded as sacrosanct in the difficult months ahead.


Whatever circular he may have disliked last year, I believe that he will find many more unpleasant circulars coming and the situation will have to be realised by those who run local government rather more than would appear from the speech we have just heard.
The hon. Gentleman went on to make a comment about Camden. He said that the reason for Camden's massive acquisition of properties was to solve the problem of the homeless. Let me assure him that the main reason for Camden's desire to make such acquisition is its sheer desire to acquire as much property as it can irrespective of cost or condition, which is why Camden ratepayers pay so much.
The debate started with a witty and urbane but somewhat uneasy speech from the Secretary of State. He never disappoints us. Everything he says is extremely clear. I have the feeling, however, that today he was less than his usual happy self. The content of what he said did not seem to match the way in which he was trying to express it.
For example, the Secretary of State was kind enough to confirm when I intervened that London certainly does extremely badly from the current set of rate support grant negotiations. I was sorry to hear him say and some of his hon. Friends repeat what is now repetition ad nauseam that it is reorganisation that is increasing the costs of local government. In London, reorganisation has been over for more than 10 years. It is not the Local Government Act and reorganisation itself which have cost an enormous amount of money and inflated staffs but the method by which reorganisation has been carried out—mainly, I fear, by authorities of the political persuasion of the Government.
In London in the rate year 1973–74 there was about £120 million of identifiable expenditure which was not included for grant purposes, and in the year 1974– 75 it is still not included. Why does London do so badly? I suppose it is because, as some have said, London streets are believed to be paved with gold—perhaps today "paved with Krugerrands" would be a fairer way to put it. But the average Londoner exists under appalling conditions.
As we heard earlier today, those who have to come in to London to work and enjoy our facilities constantly find that their trains do not run, that their tube trains are overcrowded and that there are not enough staff to run their buses. So there is no joy in living and working in London. But still the Government and the Civil Service—I fear that my right hon. Friends were as guilty as the present Government—believe that London can afford to pay more because it has so much rateable wealth. As the hon. Member for Woolwich, East demonstrated, that is not so, but it becomes increasingly difficult to persuade Ministers—and the Civil Service, I suppose—of this fact.
I too should like to quote from the GLC's brief on this subject, which discusses the fallacy of the argument about London's high rateable resources. If one takes the table of relative rateable values of Parker Morris houses and the level of a house in Dyfed as 100, Durham becomes 131, Kent becomes 150, Mersey-side 157 and Greater London 243. As a result of London's higher rateable values, our domestic ratepayer pays an average of 50 per cent. more in rates than the average ratepayer in the rest of the country, although average household incomes in London are nowhere near that much higher. Statistics for 1972 showed that they were about 20 per cent higher, and there is no sign of any recent improvement.
The hon. Member for Woolwich, East listed some of the factors which are building up the problems for London—the police, higher land and construction costs, bigger social service caseloads and higher education costs in deprived areas where so many children are immigrants. This will cost London about £200 million extra and the total extra cost will be about £300 million. These extra costs are not given adequate weight in the formula which discriminates yet again against London. The 12 per cent. factor for London's higher costs in 1974–75 will go down to 8 per cent. in 1975–76, yet there is little likelihood of those costs suddenly going away.
What are some of the facts about London's emerging problems? Leaks— they are fairly authoritative—suggest that the Inner London Education Authority precept will be up from 22p to 34p, an increase of over 50 per cent. The GLG


precept will be up from 9½p to 20p, an increase of well over 100 per cent. I would have said, had he not been so courteous, "Where is the Secretary of State's average of 25 per cent.?" I would have gone on to say that the actual figure might have been nearer his humorous aside of a few weeks ago—100 per cent. But he was kind enough to confirm earlier that the London average would be much higher than 25 per cent. Any London borough which gets away with an increase of less than 50 per cent. will be able to count itself extremely fortunate.
Take, for example, the City of Westminster, which may have to raise its domestic rate by 65 per cent. That figure includes 2p for London equalisation. London has always set an example which could be followed in other parts of the country in which the authorities, mainly the inner London authorities, with a high resource of rateable value have contributed to those less fortunate. It would have been possible, by adopting the scheme that the Government and the Civil Service appeared to want at one stage, to have a fairer spread throughout London, but that would have meant that instead of an authority like Westminster having a 2p equalisation rate, it would have had to have a 5p rate to ensure that everyone got something out of the pool. But I am not sure that the domestic ratepayers, private and council tenants, for example in Paddington, Notting Hill or Kilburn, who may be just over the rate rebate level, would be willing to pay that much extra. Therefore, if Westminster is typical, as I believe it is, the domestic ratepayer in London will do very badly and is being shabbily treated.
Rates in outer London will probably rise by an average of between 50 and 60 per cent. The make-up of an outer London borough's rate bill is that about 65 per cent. goes on education, 10 per cent. on social services and between 5 and 10 per cent. on housing. From the documents accompanying the order, it is clear that the Secretary of State for Education and Science will allow a 4 per cent. growth in education, and we have been told that there will be no cut in council building. Yet it is clear from all that has been said that local authorities are meant to economise somewhere.
I see from the Press that a Minister in the Department of the Environment is

considering writing a letter of admonition to the council of the London borough of Barnet for paying salaries to certain chief officers above a level that he thinks adequate. I hope he will take on board the need for an even-handed policy and will investigate the activities of the council of the London borough of Camden, which recently reduced the working week of its manual workers to 37½ hours in spite of requests not to do so from the appropriate Whitley Councils. That will cost the Camden ratepayer about £500,000.
If the Minister feels it necessary to write to Barnet because it is paying above the approved scales, I hope he will also tell Camden that he disapproves of its paying above the scales by reducing the working week in this way.
The hon. Member for Cornwall, North (Mr. Pardoe), who happens to be one of the many people who like to live in my constituency, reinforces the view I have already expressed—namely, that reorganisation is often blamed for the increase in costs. The hon. Gentleman instanced planning. I am still critical that no one expected the problems that emerged from the split in planning when we reorganised London in 1963–64. We allowed a split of powers to exist outside London in the new counties and districts. There is not the degree of co-operation which happily existed in London.
I am bound to say—this is no political argument—that there was a good degree of co-operation between the London boroughs and the GLC. Outside London there has been an almost impossible situation in which both the counties and the districts have been sending planning applications backwards and forwards in search of staff. I do not think that any of us in our wildest dreams or fears thought that that would be the result. That is one of the main causes of the massive increase.
If I am right that the bulk of expenditure in an outer London borough is taken up by education, social services and housing—we are told that for education there is to be a 4 per cent. growth and that there is to be no cut in expenditure on council housing—where will it be possible for local authorities to make some cuts? The document issued by the Department makes it clear that there will be no room


this year for any improvement in the standards of management or maintenance of local authority dwellings. I am sure that the right hon. Gentleman's postbag is as full as mine with letters from council tenants who write, irrespective of the political control of the local council, to complain, for example, about the failure of the local authority to carry out repairs. Yet we are told there is no room for improvement in what are admittedly low standards.
We are told that there is to be a standstill in council housing, but if local authorities continue to acquire properties there may be not a standstill but a decline. Is that what is in the mind of the Minister? If he is encouraging local authorities to enlarge their housing stock, should he at the same time encourage them to allow the standards of maintenance to drop so that when the work eventually has to be done it will cost very much more as the property will have deteriorated? Would it not have been wiser for him to have chosen a different option instead of allowing a 4 per cent. growth in education? Perhaps he should have allowed a slightly lower figure and at least ensured that the standard of maintenance of publicly-owned buildings did not deteriorate still further.
Having sat in on rate support grant negotiations, I know that no Minister ever has an easy task. It is clear that this year the right hon. Gentleman has had an impossible task. None the less, I believe that he has made a wrong judgment. Only time will tell.
I believe that London is badly treated. I venture a guess as to why that is so. Perhaps London is being badly treated this year because there will be no local elections. If local elections had taken place in London this year, I wonder whether the Government would have allowed a 50 per cent. increase in the rates. The Secretary of State "tuts tuts". He appears to shy away from any idea that he is ever motivated by political considerations. I do not believe that the average Londoner will be taken in, however charmingly the right hon. Gentleman may put his case. There will be elections this year in other parts of the country, but in those areas the average rate increase will be 25 per cent.
We get many useful briefs for use in rate support grant debates from interested

parties such as the GLC, the AMA and the London Boroughs Association. This year I found the LBA's document extremely good. Apart from dealing with the problems mentioned by the hon. Member for Woolwich, East, it made three specific suggestions about how London might have its affairs better ordered in future.
I shall briefly outline the LBA's proposals so that the House may know what the Minister might be able to do in time for 1976–77. First, it recommends that London's expenditure should be brought into the regression analysis on which the right hon. Gentleman's formula is based. Secondly, it is recommended that he should increase by a substantial amount the percentage addition in respect of London's higher costs Thirdly, it is recommended that he should reduce the proportion of rate support grant devoted to the resources element, thus leaving a larger total for distribution through the needs element. I believe that these are constructive suggestions. I hope that they will be taken on board by the right hon. Gentleman.
These orders will be a slight palliative but little comfort for the average Londoner. The Government must insist that the Layfield Committee reports more swiftly on this occasion than it did previously after considering another matter. I hope that the Government will take early action when the committee reports. I must remind the right hon. Gentleman. who has said on more than one occasion that he expects still to be in office in 1978, that there will be elections in London that year. The London Labour Party will not think him such a nice, happy chap if in that year Londoners are still being as badly treated as they are this year.

6.57 p.m.

Mr. Peter Temple-Morris: To give a certain credibility to what I want to say in future—I have not yet heard this said straight by any of my hon. Friends—I must say that I do not believe that any Government in the present economic situation could have given more money by way of grant. I do not wish to take up the argument about the rating system itself and to go into all the matters which we debated so fully such a short time ago.
It is right, however, that I should briefly mention the rating system and my


party's political policy, with which I so much agree. There is a problem in giving a generous award at present. The longer it takes to deal with the problem, the more generous will have to be the awards supplied by future Governments to keep the system alive. That is the predicament.
Any committee takes time to report. We all know that rating is a complicated subject. We all know that we cannot have a rapid decision, but I fear that by the time the Layfield Committee has reported the rating system will be so much shattered in its own ruins that we shall be urged to take a panic decision. The result will be that the whole process will start once again.
I urge the Secretary of State, with all the power I can muster and as reasonably as I hope my voice sounds, to speed on the Layfield Committee to a conclusion so that we can make a positive decision.
I shall make but three definite points on behalf of English country areas. We have had a plea on behalf of Welsh country areas and we have heard plenty about London. We have heard of the position of Cornwall in relation to Wales. I speak on behalf of the English country areas. I begin in a bipartisan manner because the previous Conservative Government began governmental progress towards the shift of money and the balance of resources from the country to the towns. I do not wish to discuss domestic rate support grant and whether it should be variable, but the shifting of money and resources was started by a Conservative Government. I say that as a Member representing a countrified constituency.
It should be recognised by country areas that on rates they have for some time had it fairly easy compared with the urban areas. I mention that only to give credibility to the point that if we are to have this change-over we must not do it at a time of intense inflation, just after local government reorganisation, the increased costs last year and all the other factors which have been mentioned today. One perhaps accepts that, over the years, the rural areas have fared better than the towns. However, we have heard certain percentages mentioned. For example,

the rates for the new county of Herefordshire and Worcestershire last year rose by 72 per cent., and before the measures taken by the Secretary of State in July the increases in my constituency were to be between 80 per cent. and 115 per cent. The same problems arise again this coming year.
The total grant is split up into various elements. I ask the Secretary of State for the Environment and the Secretary of State for Wales to bear in mind all these factors when considering the situation of the rural areas, where there is a feeling that, compared with the towns and in struggling against the interests of the towns, the rural areas, whether in agriculture, in the problems of the self-employed or in the rating situation, are losing out all the time.
Party politics apart, pleased as I was that the Secretary of State for Wales should have taken on his distinguished office, he brought in, although not by his own administrative action, a month after taking office, the most expensive water emanating from Wales that Herefordshire had ever encountered. Most of my constituency has the benefit of the pure water of the right hon. and learned Gentleman's domain, but has to pay an extreme price for it. Last year's water rate went up from 3·8p to 13·4p.
The Secretary of State for the Environment has told us in answer to interventions by my hon. Friends the Member for St. Ives (Mr. Nott) and Cirencester and Tewkesbury (Mr. Ridley)—and we all know it to be so—that local government reorganisation and water reorganisation have been much greater in their effect on Wales than on the rest of the country. That is his explanation, and I have quoted his words, of the Welsh discrepancy. If that is so, my area has not only had its own reorganisation of local government but has Welsh water as well. In our domestic rate relief, we have 18½p as against 36½p in Wales, and this is felt deeply by the Herefordshire constituencies.
I know that the Secretary of State for Wales has a committee considering the water problem, but I fear that it will devote most of its time to the dire internal problems of Wales and its water supply and perhaps neglect those of us who are sitting on the border and do not get Wales's domestic element rate


support. I appeal to both Secretaries of State to remedy the situation as they sit opposite me in their places.
The Secretary of State for the Environment is considering the district council's position. As the county councils get more and more remote, if the system is to succeed it will do so because of the district councils, which are at least in touch with the people. If they are to succeed, they have a good claim for consideration for some part of the rate support grant—I am talking of the needs element—going to them. While the Secretary of State for the Environment is not taking action on that matter this year, I understand that he is considering it for next year. It would be a great step towards the success of the system, for which he is responsible, although he did not introduce it.
The need to economise has been emphasised. As a result of local government reorganisation, Herefordshire—a reluctant bride—was married to Worcestershire. If the Labour Party had been in office at the time, we would still have been married but might have had a slightly different husband. Our matrimonial problems would have been the same, however. I did not represent my constituency at the time of reorganisation, but so great is the feeling locally that I have no hesitation in saying to this House that I would have gone against the three-line Whip and voted against local government reorganisation.
In considering the appeals for economy, there is a blazing issue across Herefordshire and Worcestershire—the project for new headquarters for the Herefordshire-Worcestershire County Council. If we and, more importantly, our constituents are to accept that the right hon. Gentleman means it when he talks about local authorities keeping their side of the bargain and sticking to inescapable expenditure only—his view has been echoed by the Chancellor of the Exchequer—surely a project for a brand new headquarters is not within that bargain.
The project, which has earned some very derogatory descriptions in the area, is to go up at a cost of a penny rate —a figure used in justification. An application for loan sanction for between £5 million and £6 million will soon go

before the Department. When ratepayers are being asked to meet rises in their rates to the extent that they are this year, with the prospect of further increases next year, they resent having to stomach grandiose projects of this type, designed to cater for the standards and comforts of those who are partly responsible for the rates bill. If ratepayers are asked to stomach this sort of thing in the present situation, we as politicians, locally and nationally, will have no credibility at all.

Mr. Crosland: The hon. Gentleman has been kind enough to write to me about this matter, and I have a great deal of sympathy with his views. As I understand the position, however, the building comes within the locally-determined expenditure and so, in effect, the Government have no control over it.

Mr. Temple-Morris: I shudder to think that the Secretary of State has no control over something as important as this. It is not for me to tell him what his powers are. Although I will have to put down a Question after checking the detail, I suspect that in fact he does have some powers to stop something like this. They may be emergency powers; that, I think, is the appropriate expression. My suspicion is founded on a letter written on the right hon. Gentleman's behalf to a political opponent at the recent General Election when this issue was raised. I hope that the right hon. Gentleman has such powers, and I hope that he hopes so too. If he does not have them, he is in for far more difficulty nationally than perhaps I am in for locally.
Anyway, those are my points and I am very grateful to have been able to make them across the Floor to both the responsible Ministers, the Secretary of State for the Environment and the Secretary of State for Wales.

6.59 p.m.

Mr. Michael Ward: I hope that the hon. Member for Leo-minster (Mr. Temple-Morris) will forgive me for not following his case in detail. As one who has had 16 years of work in local government, and as the chairman of a finance committee responsible for budgets in the last three years of budget making, I assure the hon. Gentleman that the right given to local authorities to have a block allocation of funds for projects,


to allocate as they saw fit under the arrangement for locally determined schemes, is a right which is part of the independence of local government and is very much treasured. That arrangement was welcomed by both sides of the House when it was made. I hope that the hon. Gentleman will not seek to pursue the point too hard to try to diminish in any way the freedom of manoeuvre which authorities have been allowed in that respect.
May I say how much I and the representatives of local authorities in Cambridgeshire and my constituency of Peterborough have welcomed the scale and the generosity of the award which is being made by my right hon. Friend in the order? What has struck them and me very much is that the chaos which we all had to endure last year has not been repeated. Last year, I well recall, we had two so-called statutory meetings between officers of the Department and the local authority associations, before the statute making them possible was in existence. We had a succession of hurriedly prepared, difficult and long meetings, carrying on right up till the 11th hour and the 59th minute of budget making. We appreciate very much the extensive consultation this year and the generous time which has been allowed to the associations and to the authorities for them to understand the contents of the proposed order.
Last year, we had some very misleading forecasts from the right hon. and learned Member for Hexham (Mr. Rippon) about the extent of likely rate increases coming this spring. He talked in November 1973 of an average 7 per cent. rate rise for householders in the current financial year. As my right hon. Friend the Secretary of State said, the right hon. and learned Gentleman also advised authorities to budget for a rate of inflation of about 9 per cent. As a consequence, the rate support grant order—based, presumably on that sort of forecast—and the activities of local authorities were subject to grievous underestimation. Indeed, the new county of Cambridgeshire, taking the advice of the right hon. and learned Member for Hexham, budgeted for inflation of about 10 per cent. in the period from December 1973 to March 1975. But instead of having to pay £5 million to-

wards inflationary costs, it is having to find about £10·8 million, an increase of 22 per cent. This has created serious difficulties for that authority, to which I shall refer shortly.
The total increase in rates this year is, after all, a function of the settlement that was made and fixed by my right hon. Friend entirely on the basis of the figures worked out by right hon. and hon. Members now in opposition. The only change possible was in what was called the variable element. A great deal of noise was generated in the country, and in this Chamber, about the content of the variable element. However, it was, of course, but the small change of the rate support grant order, being only 7 per cent. of the rate support grant for the current year. I suppose that to some extent Parkinson's Law sometimes applies in these matters, as it does in others. Local authorities are frequently criticised for the way in which Parkinson's Law sometimes seems to operate in their proceedings.
However, having been able to attend the Press conferences held by both the Association of Metropolitan Authorities and the Association of County Councils, I was extremely gratified to hear from the chairmen of those great organisations warm words of welcome and appreciation for the size and generosity of this overall settlement by my right hon. Friend. Indeed, Sir Meredith Whitaker—who is not, I believe, a member of the party to which I am proud to belong—thought that it was an extremely good order. He said that his authorities, including the county of Cambridgeshire, would welcome particularly the special sum of £350 million provided in recognition of the special difficulties which counties and other authorities face this year. This wiping clean of the slate was greatly welcomed by him. One must say that the special difficulties to which the order refers are really the special difficulties created by the over-optimism and the underestimation of right hon. and hon. Members of the Opposition.
The order was equally welcomed by Sir Robert Thomas, the Chairman of the AMA, who said that it was the most generous settlement ever. Certainly, when my hon. Friend the Under-Secretary kindly saw leading members and officials


of Cambridgeshire County Council a short while ago, they equally praised the level of settlement.
Cambridgeshire County Council, which has been more reorganised, perhaps, and has suffered the problems to which hon. Members have referred more than almost any other local authority in the country, was subject to amalgamations following the 1958 Act under the general Boundary Commission recommendations, and it was reorganised recently when the four former counties were brought together into one. This has created considerable problems for those responsible for ordering the administration of the county.
In July this year, the county council had to make some very painful decisions as a result of its financial situation. It had to decide whether to make cuts in present services or to try to go for a supplementary rate. It had no option but to take one of those courses. It chose to take £792,000 from its estimates for services in the current year. The effect of those cuts has already fallen heavily upon education. For example, Cambridgeshire has made no moves whatsoever yet in relation to nursery education, and does not see itself being able to do so in the coming year. This is a matter of grave concern in large parts of the county, particularly in the new town area of Peterborough.
The county of Cambridgeshire has also had to make substantial reductions in services in highways and in public protection. In the matter of public protection it was hoping to take the initiative which my right hon. Friend the Secretary of State for Prices and Consumer Protection was hoping it would take in developing consumer advice services. That project must go into cold storage, even before we come to the advice given by my right hon. Friend the Secretary of State for the Environment in the order that is before us, and before the series of economies which it will have to consider in the coming year.
In addition to that, we have to consider the immediate situation. I have listened with great patience to Opposition Members' comments about overstaffing and extravagance. This is a cry which has been heard not only from the Opposition but from one or two of my hon. Friends.

There may be some among the new local authorities which have made, perhaps, injudicious decisions in the first year or so of reorganisation. I am particularly mindful of the observations made last month by my hon. Friend the Member for West Bromwich, East (Mr. Snape). He is not in the Chamber at present, although I advised him that I should be referring to what he said on 20th November. Speaking of the new authorities, he said:
Not only have the new authorities proved completely incompetent to carry out the functions for which they were designed. Rather than admit their incompetence and rather than their chief officers and deputies admitting that they are vastly overpaid, they have taken to employing a completely new innovation, the PR man. The last refuge of the gin-sodden PR man is local government."—[OFFICIAL REPORT 20th November 1974; Vol. S81, c. 1418.]
My hon. Friend went on to give a number of examples of posts being offered, including my own as Press officer with the Inner London Education Authority, until I was elected to this House. Perhaps on another occasion I shall say to my hon. Friend that he does a great disservice to local government to speak in such generally disparaging terms of local government.
I can say with certainty that the county of Cambridgeshire has pursued all its new responsibilities with great diligence and enthusiasm, and it has been extremely prudent on staffing. The number of administrative staff employed by the county council was 2,257 in October 1973, in all the constituent authorities. Making allowance for the transferred services, this figure has been reduced to 1,989 in post. That is the opposite to what many hon. Members have been suggesting about incompetence and extravagance in local government. No doubt there are local authorities which have a similar responsible story to tell.
Cambridgeshire has a problem which has not yet been adequately recognised in the formulae put forward in the Rate Support Grant Order. It has a rate of growth of population eight times the national average. It has considerable problems in the short to medium term, and I hope that when considering the review of the formulae in the next order my right hon. Friend will bear in mind the problems created by growth in rapidly expanding areas. I hope he can agree that some device should be built into the order


which will allow this matter to be the subject of negotiation, and not for only one year at a time, and to include some forward thinking to reflect the immediate costs borne by these rapidly growing areas. I hope he will be able to make an arrangement which will enable an adjustment to be made by agreement with the associations in future years.

7.22 p.m.

Mr. Charles Morrison: I strongly agree with what the hon. Member for Peterborough (Mr. Ward) said in defence of local government. I served in local government for a number of years, although my service was not as recent as his, and he is, therefore, able to offer a defence of local government from immediate past experience.
There has been a tendency over the years for this House to use local government as a whipping boy, to blame it for all evils and for waste of one sort or another. It has been blamed for extravagance. No one in local government would deny that there is waste, but I suspect that it is no greater or less than the waste in Whitehall or even the waste in many large companies.
As my hon. Friend the Member for Southend, West (Mr. Channon) pointed out, debate on this matter has in the past been of a technical nature, and perhaps that is partly because there used to be no more than a small annual grumble about rates which lasted perhaps a week or not much longer. Times change, however, and that change has been reflected in many of the speeches today. For example, my hon. Friend the Member for Hampstead (Mr. Finsberg) pleaded for London to be treated more fairly. I would be delighted if that could be done, but I know that it would mean that other parts of the country, probably including my own, would be treated less fairly. The reality is that there is a shortage of resources. It has become almost a cliche to say that the rating system is at breaking point. None the less, it is true, and this rate support grant order makes it no less so.
That is no criticism of the amount or proportion of the grant for 1975–76. The hon. Member for Peterborough referred to the generosity of the Secretary of State and I accept that he has been generous in view of the state of the economy. Some

may think he has been too generous, but the size of the grant, however generous, however small or however large, is no consolation to the hard-pressed ratepayer. Nor is it a consolation to the ratepayer to reflect on the variety or quality of the services which are provided by local government. It is a credit to both local and central Government that these services have increased and improved enormously over the years. What worries, irks and infuriates the ratepayer is his inability to pay the ever-increasing rate demand, and the knowledge that only a year or so ago the price demanded for local government services was not unreasonable. Now that price is becoming—and to many has already become—unacceptable.
The Government are coping in a dilatory manner with this situation. I do not think that the Secretary of State improved matters today by refusing to give an estimate of the rate of inflation for the forthcoming year. I think that he was implying that the Government have no control of inflation and, regrettably, that the social contract is not working. It is not enough for the Government to say they have set up the Layfield Committee and then just to leave it to get on with the job. What matters to the local ratepayer is the size of the demand, and in that respect the Government are offering no hope for next year.
In my county it seems likely that the rate support grant increase order should cope with the effects of inflation in the current year. The same should be true of all counties provided the method of distribution of the increase is arranged fairly. I hope that the Secretary of State for Wales will comment on that point when he sums up. For next year the Secretry of State for the Environment has asked for a limit in growth in real terms of 4 per cent., but in my county there is virtually no doubt that that would involve a cut in services. The Secretary of State should not think otherwise. Therefore, the basis for his belief that the average increase in rates will be 25 per cent. may be totally false.
That emphasises two points. If the rate increase equals more than 25 per cent. the Government must be extremely careful how they apportion the blame. I do not doubt that they will try to blame local authorities for higher rate increases,


particularly if they are not Labour-controlled. I have no doubt that in some cases there will be strong justification, in view of the need to maintain services, for the rates being higher than the Secretary of State's estimate.
I hope, whether the increase is more or less, that the right hon. Gentleman will take careful note of what is happening in local authorities and will continue to give them guidance. There must be detailed consultation and understanding between the Government and local authoties about any reduction in services. In particular, there must be consultation about the content of the circular which is to be issued.
The Government's outward concern for the ratepayer would have seemed a little more real if at the same time as setting up the Layfield Committee the Government had indulged in a self-denying ordinance not to impose any more duties, tasks or responsibilities on local authorities, and, therefore, not to impose the potential for increasing the burden on the ratepayers. I think that the Secretary of State said that he would do his best to ensure that while he was trying to control local government expenditure his colleagues would not, in effect, be doing their best to increase it, but the Government have already added to the potential burden on the ratepayer.
There are, for example, the Housing Rents and Subsidies Bill, which will give local authorities the opportunity to increase the burden borne by the ratepayer; the encouragement given to local authorities to increase their housing stock, which is bound to mean increased loan charges and increased maintenance costs; and the Government's land proposals. If the land proposals do not add to the costs borne by ratepayers I do not know what will. They are bound to create a demand to increase the bureaucracy of local government, and to increase the demand for planners, although the planners probably do not exist. They are bound to require extra manpower to be employed by local authorities for the management of the land. Set against those matters, and others which will, no doubt, emerge in the months ahead, the Government's concern for the ratepayer does not seem real.
That is emphasised by my second point. I am worried not just about the rate

demand for 1975–76 but about the rate demands for 1976–77 and 1977–78. We have been told that the Layfield Committee is not to report till the end of 1975. That is bound to be too late for a reform of the system of local government finance for 1976–77. That means that there is no hope of relief for the ratepayer till 1977–78 at the earliest, and even that may be optimistic.
What will happen if the Government, after all this time, disagree with the committee's recommendations? Shall we have yet another committee to consider the recommendations of the Layfield Committee, or will the Government make up their own mind? If they will do the latter, they might as well do it now and get it over and done with. In any case, the chances are that the only solution to the problem faced by the ratepayer will be close to the one suggested by the Conservative Party at the last election—a partial abolition of the rating system.
It would be much better if the Government began to face up to reality. What planning is the Department beginning to undertake in anticipation of the reform of local government finance? Unless the ratepayer is given some help the rating system will not just be at breaking point but will break down. What, then, of the local authority services, and the position of everyone employed in local government?
Everyone knows that the problem of local government finance is very difficult. Ever since I became a Member in 1964 it has been under discussion. Even before 1964 the late Richard Grossman was saying that the Labour Party would reform the rating system when it came into power. It did not do it then and it has not done it since. I admit that my own party has also failed to do it. It is high time this difficult matter was brought to a conclusion. I hope that the Government will approach it with greater expedition, realism and sympathy. If they do not, the future of local government will be at risk.

7.36 p.m.

Mr. Tony Durant: I am grateful for the opportunity to enter this small debate on a most important subject, a subject which, perhaps, affects every man, woman and child in the country more than any others we discuss.
It has been a debate of special pleading. My hon. Friend the Member for Devizes (Mr. Morrison) made a special plea for his area. I agree with my hon. Friend that before the Secretary of State issues his circular there should be consultation. If the right hon. Gentleman is asking for cuts, there should be good consultation between his Department and the local authorities. We must recognise that the 4 per cent. growth in real terms will mean cuts. The situation is serious.
We have the Layfield Comittee report ahead of us, but we do not know when we shall legislate on it. We have been told that the report will come out at the end of 1975, but we do not know when there will be any change in the rating system.
We have heard special pleading from hon. Members representing London, Wales, Cornwall and the Borders, and from my hon. Friend the Member for Leominister (Mr. Temple-Morris) and the hon. Member for Peterborough (Mr. Ward), who talked about the difficulties of locally determined schemes.
I make a plea for the South-East, which has not yet been mentioned. I am sorry that the Secretary of State is not here, because I am sympathetic towards him. I believe that when he became Secretary of State he wanted to consider problems of the environment, and he had great ideas about making cities better places to live in and about many other aspects of our environment that we are all keen on. But this poor Minister had the rates problem dumped on him and it has been with him ever since. It has become his nightmare. I imagine that it is all he thinks about most of the time.
Every local authority faces tremendous problems, but I want to talk particularly about the capital debt problem. My local authority, the borough of Reading, has a debt of about £61 million. That is an enormous debt for an authority with a population of 150,000. It has to be paid off and interest charges have to be met before any services are paid for. The Government must closely examine the whole question of local government borrowing and lending. There has been a tendency for local government, in an effort to develop more schemes, to borrow at high interest rates, which have attracted

money. This has created another debt and another problem.
I was pleased to hear that the Secretary of State is looking closely at the question of staffing. It is a pity that we have heard nothing about the inquiry into staffing by my right hon. Friend the Member for Crosby (Mr. Page) since the Labour Party came to power. The inquiry was in train, and its report would have been useful. It is sometimes said that we exaggerate the matter. Would not it be better to have a report so that we knew the facts? At present, there are different theories about whether we are wasting staff. Some people say that we are short of staff.
I make a special plea for both the South-East and the district councils. In my local government experience, I have always been involved at district council level. I have had a plea from the District Councils Association about the needs element. The association urges that it be passed down to the local authorities at district level. Those authorities are carrying out a considerable amount of Government policy and legislation.
The Secretary of State said that he did not think that there would be rate increases above 25 per cent. Then he mentioned another figure—and then he was not sure. He should cease making statements about what he thinks will happen, because every time we have a statement everybody gets worked up and then we find that what has been said in the statement does not stand up.
I make a plea also on behalf of the small shopkeeper. We have heard pleas on this subject in the House during the past eight or nine months, and the matter has been raised in debates and in Questions by hon. Members from both sides. Heed should be paid to the pleas for action to help the small shopkeeper. There is social implication here, and it has particular importance in my constituency where the town is large and scattered and in which there are a number of smaller surrounding areas with shopping precincts which old and young people like to use. We wonder whether in the future we shall be left with only a town centre shopping area, because the small shopkeepers in the surrounding areas are finding it practically impossible to keep going. There should be a special dispensation in the form of rating relief


for small shopkeepers. I know that this could present difficulties, and it is not easy to decide what is a small business and what is a big business, but a system of special rating relief for small shopkeepers could be worked out.
There has been a special grant for subsidiary high costs, as they were called, in the South-East, but this special dispensation is now being cut out. This will be unfortunate for districts such as mine on the edge of London. The London weighting allowance ceases to apply a few miles down the road from my constituency which has many difficulties arising from high costs in housing and other features of a built-up community. The special aid which was previously built into the rate support grant to help meet the sort of difficulties I have described should be for instance, reinstituted. The South-East has particular problems in, for instance, attracting staff.
There has not been much reference in the debate to bus fares, but it is clear that what is being proposed by the Government will mean bus fare increases, which will hit the two sections of the community who cannot look after themselves—the old and the young. These two categories need buses, and it is a pity that the Government have not given special thought to that.
I appreciate that house building is probably slightly outside the terms of the debate, but there are costs which arise from house building schemes. I am thinking of infrastructure—provision of roads and drains for example—which can put a large burden on the rates. Therefore, whether the Government like it or not, their proposals will slow down the housing programme because of the infrastructure work involved.
The Secretary of State should speak to the water authorities. In my area the water authority is becoming the planning authority. The local council wants to go ahead with a development, but is told by the water authority that it is unable to provide an adequate water supply to the district involved for some time to come. This can lead to difficulties in, for instance, planning new council estates.
I make a special plea to the Government to consider the capital debt of district councils, and I urge that the needs element be siphoned down to local

districts so that they have some help. Also, the Government should reconsider a special element in the rate support grant for the South-East, which has peculiar problems and high costs.

7.44 p.m.

Mr. John Tomlinson: I have listened to much of the debate, and I am particularly struck by the contrast between the hysterical nonsense, mostly from members of the Opposition, when we last debated the rate support grant in March and the relatively little interest being shown this time. This lack of interest is probably a tribute to the work done by my right hon. Friend the Chancellor of the Exchequer in the mini-Budget earlier this year, which took many of the problems out of this year's rate argument and foreshadowed the provision of much more substantial support in the increase order and the rate support grant order for 1975–76.
The hon. Member for Eastleigh (Mr. Price) made a plea earlier in the debate that we should not make partisan points, because the General Election is over. That was equally true in March when we last faced this issue. I can understand the hon. Gentleman's reluctance to make partisan points this time, because the matters about which he and his hon. Friends were complaining earlier in the year should now be the subject of the congratulations of the whole House on the action taken by my right hon. Friend the Secretary of State.
In the present serious circumstances, bearing in mind the continuing concern among ratepayers, we should not be doing anyone justice if we failed constantly to mention where the problem began. I am not surprised that the hon. Member for Southend, West (Mr. Channon) was a little coy about recalling figures given by the right hon. and learned Member for Hexham (Mr. Rippon) when he advised the House in January about the kind of expectation that ratepayers should have for what is now the current financial year. He said:
I am able to say that the average domestic increase over the country as a whole should be about 3 per cent. The maximum of 9 per cent. is to be, as far as one can achieve it, a maximum, but the variations below 9 per cent. will be very considerable and should result in a reduction in the domestic rate in many areas."—[OFFICIAL REPORT, 22nd January 1974; Vol. 867, c. 1471–2.]


No wonder that the hon. Member for Southend, West was coy about recalling the figures, even though, at the same time, he was pressing my right hon. Friend to give an estimate of inflation for next year. If the estimate of inflation for next year were as accurate as was the estimate of the rate increase given by the right hon. and learned Member for Hexham, it would not be worth the paper it was written on.
The irresponsible expectation created by the Conservative Government has been largely to blame for much of the outrage felt by ratepayers during the year. The expectation they were given that their rates would be kept to a 3 per cent. increase was irresponsible, in the light of all the circumstances then known. It was at that time that much of the irresponsibility which has led to rightful feelings of outrage among ratepayers began. The blame should be laid at the feet of the right hon. and learned Member for Hex-ham, who manages to avoid all our debates on these matters nowadays with remarkable regularity.
However, responsibility for the present rates problem can be found in other areas. We have heard today a number of examples of the appalling effects of reorganisation of local government. There was what I regard as criminal irresponsibility in that reorganisation, because no provision was made at the same time for reorganising the financial basis of local government. It is not good enough for the Opposition to say what they would have done. It is no good their talking about abolishing domestic rates by the end of the year, or at least taking substantial steps towards it, while at the same time introducing 9½ per cent. mortgages.
The hon. Member for Southend, West has said what he would have done had his party still been in office towards abolishing domestic rates, but we have had such promises from the Opposition year after year. We had promises in the Queen's Speech in 1972. What happened? —nothing. We had promises in the Queen's Speech in 1973, but again nothing happened.
There were promises made also in the consultation document on local government finance. It referred specifically to legislation being brought in by the end

of 1974. But when my right hon. Friend began to look into the rating situation earlier this year, he found that no such legislation was available to operate from 1st April 1974. No work had been done towards resolving the problems of rates for the current year. My right hon. Friend encountered great difficulty when he took over, because he found that there had been no preparation towards solving the rates problem.
That vacillation has been responsible for the emergency measures which have had to be taken in the last 12 months. It was a vacillation reflected in the comments we had in the Tory consultation document, where it was said:
… no substitute offering major advantages of a similar kind emerged from the consultation and comments on the Green Paper. For these reasons the Government propose that rates should remain the principal source of local revenue.
Suddenly, from that position there was an overnight mass conversion to the idea of abolishing domestic rates almost immediately, although no adequate preparation had been made for such a move.
Coming to the real issues rather than the phoney issues that have been presented over the years, I am concerned about the growth in local government expenditure. Apart from the superficial arguments we have had when Conservative Members have tried to blame the Government, there are serious arguments which need to be presented on orders such as this. In present economic circumstances, local government cannot expect to be immune from the consequences of its own decisions. It cannot expect that continually expanding programmes of its own choice will automatically be underwritten by the Government. For that reason, I find it totally irresponsible for the hon. Members for Southend, West and for Eastleigh to suggest a fixed limit in future increases.
The hon. Member for Southend, West suggested that in no circumstances should we have rate increases in excess of 25 per cent. The hon. Member for Eastleigh went further and suggested that, despite inflation, there should be no increase in rates payable next year. In those circumstances what kind of financial control can there be in local government? When there is not that degree of local accountability, we shall have reached a situation


when local government expenditure will have run completely out of check. Yet hon. Members opposite, having put forward the policy which led to that situation, complain about increases in the public borrowing requirement.
I welcome this year's increase in the rate support grant. It is of unparalleled magnitude in amount and in the proportion of local government expenditure being met by the Government. It was necessary to achieve some rectification of the situation created by incompetent financial management and incompetent arrangement of local government reorganisation by a Tory Government. By means of the increase order and the extra £350 million, the Government have wiped the slate clean and done their bit to restore a situation of rectitude in local government. The slate has been wiped clean of the consequence of estimates based on the expectations created by the right hon. and learned Member for Hex-ham. They will no longer be carried forward into next year's figures.
I welcome this not as a matter of gratification but as an act of economic realism. It had to be done despite the economic circumstances. I strongly welcome the view of my right hon. Friend that in present circumstances next year's rate support grant will need to reflect no growth other than the revenue consequences of committed capital expenditure.
In present circumstances, local government accounts for something in excess of 30 per cent. of public expenditure. While I have a great deal of sympathy with those of my hon. Friends who argue for the sanctity of local government programmes, I must point out that such programmes cannot be expected to be immune when other areas of public expenditure are under challenge. There has to be concern about the degree to which local government expenditure can continue to grow. While we are financing real increases in public expenditure by increasing the public borrowing requirement at a rate that many hon. Members would regard as dangerous, the growth in local government expenditure cannot continue unchecked or unchallenged.
In present economic circumstances, which we have largely inherited, desirable and even essential local government ex-

penditure can proceed only at a rate made viable by our economy. Members of the Tory Opposition have spoken about constraints upon the degree to which rates can increase. That kind of argument represents precisely the kind of pressure which would encourage the more profligate use of resources by local government rather than the more efficient use of resources.
The overall situation this year is such that, despite the economic circumstances, the Government deserve much congratulation. The grant for 1975–76 of £5,434 million is a record in absolute and real terms. The proportion of local government expenditure being borne by the Exchequer—66·5 per cent.—is also a record. I welcome it.
There are certain specific items this year which are worthy of commendation. I particularly welcome the improved methodology in the needs element. It is an improvement because, particularly in respect of areas of growing population such as the Chelmsley Wood estate in my constituency, by using more up-to-date demographic statistics we are putting a dynamism into the needs element which was not previously there. I congratulate the Government on taking note of this point and doing something about it.
Like the hon. Member for Reading (Mr. Durant), I believe that there are one or two things to be regretted. Whereas the hon. Member regrets the action taken in relation to the South-East of England, I regret a similar decision—it is dealt with in the same provision—relating to the outer West Midlands. I refer to the decision to discontinue in 1975–76 the factor which was meant to take into account the higher cost of providing services in an area close to a major conurbation. I regret this, although in the circumstances I do not make too much of it because there are beneficial effects in other areas. In due course I should like to make representations to the Minister because the decision does not fully take into account some of the higher costs in areas such as the West Midlands which are close to the much more competitive labour market of conurbations such as Birmingham.
My overall impression is of a sincere and successful attempt to produce equity in the rate support grant, a feature which


was notably absent from the situation we inherited in February 1974. It is all very well for the hon. Member for Southend, West to conclude his speech by referring as a joke to Early-Day Motion No. 88. I did not notice anyone on his side of the fence laughing any more than there was anyone on the Labour side laughing.
That motion, standing in my name and in the names of over 100 of my hon. Friends, sets out clearly what we think the Government have done in difficult circumstances. If the hon. Member regards it as a joke, I implore him to intervene before I finish my speech and tell us precisely which part of the motion is funny. I am not aware that any ratepayers have laughed at it. They can see in the rate support order and in the increase order a sincere attempt to deal with a difficult circumstance.
There is nothing in the motion from which anyone I know wishes to dissociate himself. I should expect anyone who did wish to dissociate himself from it and look upon it as a joke to take a more constructive view and not merely to make a speech of that kind about it. The logic of such a position would be to pursue the matter further and to let ratepayers see exactly where they stand.
These orders represent the kind of financial management of local government which the people expect from a Labour Government. They will be warmly welcomed. While rate increases will be high in certain areas, they will be much lower than they would have been had my right hon. Friend not taken the action which he has. Increases will certainly be much lower than they would have been if we had had the same kind of financial management from which the country suffered until February 1974.

8.0 p.m.

Mr. Arthur Jones: The phrase which I particularly noted in the speech made by the hon. Member for Meriden (Mr. Tomlinson) was "the sanctity of local government expenditure". He used the phrase in the context that if there are to be economies in local and central Government expenditure local government cannot expect to escape those disciplines. I agree with him entirely in that respect. I am sorry that he had to be so politically

partisan in much of what he said. Although there is a significant political content in one's attitude and the decisions one takes, to try to put the problems we face in an historical context, as he did, is not a very useful contribution to the debate.

Mr. Tomlinson: Will the hon. Gentleman explain to the House how it made a useful contribution to the debate in March this year?

Mr. Jones: I do nut want to go back to March this year. That would not help, either. I much prefer to address myself to the orders that are before the House. I hope that I shall carry the hon. Gentleman with me in some of my comments.
The financial crisis that faces local authorities is by no means relieved by the proposals before us. There is a tremendously high rate of inflation, and I was disappointed that the Secretary of State was not prepared to commit himself, albeit not specifically, but still in much more definite general terms, on what the rate of inflation is expected to be next year. Most of us have in mind a figure in the region of 30 per cent. That will present local government with a wide variety of problems.
Although the ratepayer will be helped significantly, he is given by the Secretary of State and those who speak for the Government a dose of soothing syrup in the reference to an average increase in rates of 25 per cent. We have heard from many who speak for their own constituencies that increases of 50 per cent. or more are expected. I noted with interest the remarks made by my hon. Friend the Member for Hampstead (Mr. Finsberg) who spoke for the London boroughs as a whole and suggested an expected increase in the region of 50 per cent. We have not heard of any local authorities which are expecting a balancing decrease in rates. How it is expected that the increase will be only 25 per cent. calls for some elaboration. I do not know whether the right hon. and learned Gentleman the Secretary of State for Wales will be able to help us.

Mr. John Morris: That might be explained by the fact that there are only two back benchers on the Opposition side and six or seven on the Government


side of the House. It may be that those who believe that the increase will be less than 25 per cent. have gone home.

Mr. Jones: I do not wish to argue about why hon. Members are not in the House. I am sure that they will all be here for the right hon. and learned Gentleman's speech. We shall, perhaps, not be hanging on every word, but we shall be picking out the aspects of this complicated and far-reaching matter which we think are important. It will be a different story for the ratepayers when the rate demands are issued for next year. That will be the test. The Government are playing it soft in the meantime, but, inescapably, reality will have to be faced in due course.
I want to address myself to the contradictions which I see in the attitudes of the Chancellor of the Exchequer on the one hand and the Secretary of State for the Environment on the other. In the Budget Statement the Chancellor referred to a reassessment of public expenditure, and in that context he said one of the aims was
to establish firm control over the demand on resources of the public sector as a whole so as to make sure that the programmes do not increase in demand terms by more than 2¾ per cent. a year on average over the next four years."—[OFFICIAL REPORT, 12th November 1974 ; Vol. 881, c. 270.]
The Secretary of State for the Environment said today that local government expenditure is to increase by 4 per cent. in the next financial year. That cannot do other than undermine the objectives which the Chancellor set in his Budget. There is no reference to savings to be made to offset the balance of increased expenditure on local government services.
The Budget Statement went on to refer to a review embracing housing and other social and environmental services. To my knowledge nothing has been said in that respect, but in making that reference the Chancellor said:
If this is to be achieved, it will require action from both central and local government … No matter how much he would like to see a further development of standards and services, a rate of increase which so far outstrips the growth in national resources cannot go on indefinitely."—[OFFICIAL REPORT, 12th November 1974 ; Vol. 881, c. 271.]
I agree with that part of the speech of the hon. Member for Meriden. Referring

to local authorities, the Chancellor went on to say:
They must limit the rise in their expenditure to what is absolutely inescapable …— [OFFICIAL REPORT, 12th November 1974; Vol. 881. c. 271.]
I see no reflection of that requirement in the rate support grant proposals for next year.
On 24th July, in Press Notice No. 560, the Secretary of State for the Environment referred to
a levelling oft of the rate of growth in local government expenditure".
I am not quite sure what "a levelling off" means. His proposals imply an increased expenditure of about 4 per cent. in real terms for 1975–76. That is where I see some evidence of disagreement. What lies behind the advice given to local authorities which in no way requires policies which recognise the serious financial situation with which the country is faced? We have had no statement by the Government that circumstances are so serious that there will have to be a reduction in local government services.
The country is not being faced with the seriousness of the situation in terms of the tremendous proportion of the gross national expenditure with which we are dealing. There is no evidence of a determination to ensure that local government expenditure keeps within the rate of growth of the gross national product which in the past few years it has exceeded by no less than a multiple of three. It is a reflection on the Government and on earlier administrations that we have allowed the escalation of local government expenditure. Surely, what we as a nation must do is to reduce the level of public expenditure in the local government sector. To follow policies that are directed merely towards the containment of rate increases in real terms and the maintenance of services beyond our financial resources is entirely misconceived.
There is a real crisis throughout local government whose policy of borrow, borrow, borrow at a time of rising interest rates is a denial of the nation's economic reality. I know this is only a near quote, but in one of his plays Shakespeare could have said: "Borrowing dulls the edge of good husbandry". As the Secretary of State says, we must look to a curtailment of borrowing.
Central Government will not give local authorities permission to go on borrowing as they have done in the past to meet the cost of their services. The total loan debt on local authority loans amounts to £23,381 million. Of this the long-term debt is £18,370 million and the temporary borrowing £3,656 million. It would be enlightening to know the average rate of interest on that short-term borrowing. It is undermining budgets throughout local government.
Incidentally, overseas borrowing in the last five years total £203 million, and it may be that to an increasing extent local government is maintaining services through borrowing abroad. In the circumstances of the oil crisis and the fluid situation of world currencies we may well be floating many of our local government services with the aid of Arab oil money.
Through his rate support grant proposals the right hon. Gentleman the Secretary of State for the Environment seeks to fund from central resources £3,100 million. In an award of this magnitude the real seriousness of the United Kingdom's financial situation is being substantially ignored. This immense sum will be added to the large figures to which I have referred. I was interested in the debate which took place on 4th November on local loans when the Minister of State at the Treasury said:
The control of local government spending is decided in conjunction with the Chancellor of the Exchequer, and the capital expenditure is a separate agreement made between the Chancellor and the local authorities."— [OFFICIL REPORT, 4th November 1974; Vol. 880, c. 846.]
Central Government have a clear responsibility in terms of capital expenditure by local authorities. If that statement by the Minister of State is correct, all control of local government expenditure lies in Whitehall and Westminster. As far as small peripheral matters are concerned, I think that the statement is correct. I hold the view that local government expenditure should be cut. It is the Government's responsibility to direct where cuts should be made. I welcome the clear indication given in paragraph 11 of the Rate Support Grant (No. 2) Order 1974:
… many desirable projects will have to be deferred; and … many charges and fees will have to be increased above the amounts neces-

sary merely to keep in step with price increases.
That is a good firm statement which I welcome, but it goes only part of the way.
Paragraph 13 of the order reads:
The Government intend to issue a circular, which the local authorities have indicated that they would welcome, giving specific guidance on the way in which economies in services might be made.
I do not have any hope in that direction but I shall look to economies in services.
I believe that there should be a curtailment in local government services and that this is substantially a Government responsibility. It is something away from which successive Governments have shied in the past. Such a course would answer many of the pleas from those who play a prominent part in local government. I quote from an article in the Local Government Chronicle by Mr. Othick on 15th November 1974:
If worthwhile economies are to be secured, then local authorities are entitled to ask in what direction
The Government have now met that request, and, indeed, events have forced the Government's hand.
Local government is widely criticised on all sides, but with one or two exceptions it loyally carries out Government policies and has done so in recent years in the context of significant changes imposed by this House. I refer to local government reorganisation—which has been a sea change for officers and members throughout local government—and to the establishment of regional water authorities and the reorganisation of the health services. Local government takes on added commitments on demand and sheds others at indecently short notice. The standards which it achieves are equal to the best anywhere in the world.
Local authorities need protection against central Government and the departmental ambitions which have required increased expenditure regardless of the total consequences for their own budgets and for public expenditure as a whole. I welcome the indication by the Secretary of State this afternoon that he intends to ensure that the budget will not be bedevilled by the competition for expansion and increase of services by various central Government Departments. That is a significant step forward and I


readily accept it. I congratulate the right hon. Gentleman on having made that statement. I hope he succeeds.
The parlous state of our economy demands that expenditure on local government services must be reduced. This means smaller staff establishments and cuts in services. Indeed, the Government recognise this need. If we are to protect many of the essential local government services we need to look for savings in less necessary services. We need to choose our objectives and to obtain a correct order of priorities. It is not good enough to say that we can go ahead and expand local government services as we have done in the past. There is little in these proposals that reflects an adequate recogntion of the problems which we face. In education it was a mistake to extend the school leaving age from 15 to 16.
I believe that in financial terms there could be substantial savings. We should make better use of buildings and available staff. Let us look at library services on which a total of £100 million a year is spent. I have always maintained that we need a good library service, but when people take out books of fiction why should not they pay for them? What is wrong with paying for the facility comprised in a good fiction library? Such payments would bring private resources into local government services. Surely, economies can be made in services which are inessential, and nobody can say that the fiction service of a library is essential, although it may be highly desirable. I do not include the education side of the library service, but why should not the ordinary borrower, in the main the fiction borrower, pay for the service that he is enjoying? After all, the ratepayers are footing the bill. The service, which is enjoyed by a substantial number of people in the community, is not essential. This is a question of priorities.
Surely our national dilemma lies, to some extent at least, in the fact that the British people have not as yet been brought face to face with the realities of our potentially disastrous financial plight. The Government's willingness to allow local government expenditure to continue at its present level and to be expanded by 4 per cent. is, in my judgment, contributing to our problems and is unwise and profligate.

8.21 p.m.

Mr. George Rodgers: I listened with interest to the hon. Member for Daventry (Mr. Jones), particularly for news of the areas where the proposed cuts would be made. It was rather melancholy when I realised that the hon. Gentleman was talking about education and the library service. The library system dates back a long way and is such a triumph that it seems tragic to talk of making economies in that area.

Mr. Arthur Jones: Can we afford it?

Mr. Rodgers: There are certain items that we can afford less.

Mr. Jones: Such as?

Mr. Rodgers: If we extend the range of the debate, I can point to areas where there is a great superfluity of wealth in which I should like to see economies made.

Mr. Jones: Will the hon. Gentleman tell me which they are?

Mr. Rodgers: Yes. If the hon. Gentleman wishes to linger on the subject, I point to defence and to the character who stood against me at the election and simultaneously stood for 13 other seats on an anti-Labour platform, who lost his deposit at each of them and was able to afford to forfeit deposits on that scale. That is a demonstration of an area of surplus wealth.

Mr. Jones: Yes, but it has nothing to do with local government.

Mr. Rodgers: It is an area of income. However, I shall press on with the main function of the debate.
There has been an unanticipated bonus from the massive increases which struck ratepayers as recently as March. We now have well-informed ratepayers' associations. People have suddenly become aware of the ramifications and tangled complications of local government finance. Members of Parliament who perhaps avoided the subject like the plague are now considerably more interested than previously—no doubt of necessity. Many ratepayers' associations have recently been formed and associations which already existed have had their numbers swollen.
The first and immediate reaction to the substantial increase in the rate levy was that, whatever the consequences.
increases in rates must cease immediately. Having survived the first shock, and because in the main they are intelligent, articulate people and able to present their case very well, ratepayers soon appreciated that, despite the extravagances and occasional absurdities of local government, they were sitting on a very good bargain that had gone unappreciated for many years. I accept that these absurdities and extravagances still exist, but we should recognise that they have a trivial impact on local government finance and on the spending of local authorities.
Not a few of those who originally took up the cudgels for rate reduction realised when they examined the position that they were having their children educated, refuse cleared, roads lit and kept in good order, parks tended, the fire brigade at hand and a dozen other services for a relatively tiny proportion of the average family income. That achievement has been taken for granted for many years. None the less, ratepayers quickly appreciated that the formula for collecting local revenue was not only complicated but unfair. We trust that the Layfield inquiry will lead to a lasting reform in that area.
It is interesting that many ratepayers' organisations have come to the conclusion that the basic answer lies in the old Socialist principle of direct taxation. This appears remarkable. Ratepayers' associations have long been associated with the philopsophy that their rates are borne by a few and that they should be borne by many. However, when they pursue that philosophy logically they appreciate that direct taxation is probaly the fairest form of levy. I go along with them on that.
I accept that in the coming years, not only the coming year, local authorities will have to exercise strict discipline. The extent of support provided by the central Government in current circumstances is astonishingly generous. Therefore, my right hon. Friend is entitled to seek restrictions on expenditure by local authorities. I regret that the additional support has not been linked to a greater degree of direction. I still fear that some local authorities will exercise the easy options when making cuts in the coming year.
How many council officials and councillors will be tempted to trim the functions of the social services? How many will have the courage to resist the temptation and the pressures to defer full implementation of the Chronically Sick and Disabled Persons Act and to press ahead with some prestige project? How many, looking towards the approaching council elections, will seek short-term popularity by imposing slashing cuts in sections where the need is greatest?
I believe that it is essential for local government to have the courage to place its priorities and predicament clearly before the electorate. There must be discussion on a grand scale. There must be consultation and, where necessary, adjustment in the light of considered opinion.
That there will be increases in the domestic rate is beyond doubt, despite the economies in the new level of rate support grant. I believe that people will tolerate these increases, not with rejoicing but with understanding, if they are convinced that the service is sound, that they are receiving value for money, and that the distressed and disabled are being adequately cared for.
I think we might be surprised at the response from the rate-paying public if local authorities recognise that those who pay the piper are at least entitled to be given some choice in the tune being played by their town hall musicians.
There are one or two areas interwoven with local government functions which require special and specific consideration. The first is public transport. The day must be hastened when there is direct control of public transport by local people. I refer not only to the efficiency of the service but to fare levels. We must appreciate that 50 per cent. of the public are entirely dependent on public transport. The prospect is that fares will increase and that the system will deteriorate. Therefore, we must hasten intervention by local authorities, because within the smaller districts the system is appalling and is often in chaos.
I should have preferred the Chancellor of the Exchequer to increase the tax on petrol for the private motorist even more than he has done and to pass on the extra revenue to reduce the cost of public transport. That would have had the


dual effect of saving precious oil and of improving local transport.
Special provision should have been made for sewerage and water charges in the coming year. There is little evidence of democracy in the composition of the regional water boards. I realise that the new structure was part of the dismal inheritance from the previous Conservative administration, but we have accumulated too many bodies which are not accountable to the electorate and which are not in accord with our democratic society.
My reaction to the Rate Support Grant (Increase) Order 1974 is pleasure at its total, concern about the purposes for which it may be utilised and deep anxiety that in some sectors—notably social provision, public transport, water and sewerage charges—there will be neglect in provision despite the upsurge in rate charges. I hope that my right hon. Friend will give due consideration to my concern about these sensitive issues.

8.30 p.m.

Mr. R. J. Maxwell-Hyslop: As we look in horror at the increasing crescendo of local government expenditure, I think we owe it to local government to stand back for a moment and recollect what are the additional burdens which Governments and Parliaments have placed on local government during the last few years. For instance, there is the whole panoply of consumer protection. Under the price control regulations it was the local authorities' weights and measures inspectorates who were the enforcement authorities and who had to be considerably expanded to do their job. Local authorities have to recruit more and more qualified people, at high rates of pay, for the inspection of slaughterhouses.
I remember when Parliament passed an Act making it compulsory for local authorities to inspect riding establishments. I dare say this was admirable, but it meant that another burden would fall on local authorities. When we took criminal processes against young persons out of what was previously the sphere of criminal law and put them within the sphere of the county social services and to a lesser extent the probation services,

we added enormously to the burden which local authorities had to carry.
The legislation on the prevention of pollution is enforced largely by local authorities. The inspection of dumps and of poisonous waste disposal locations and the enforcement of the regulations lie with the local authorities, which cannot enforce this legislation without qualified personnel.
I can quote an example of this from my own constituency. The local authorities have had to recruit inspectors whom they did not need to employ before but whom, because of their statutory duties, they now need to enforce the legislation.
The legislation on the control of plant diseases, which requires people to fell elm trees and so on, is admirable, but it is yet another of the duties which the central Government have imposed on local government within the last few years. When we are critical of local government and talk about increased establishments and higher expenditure, quite apart from the change in the value of money, it is only fair to ask ourselves whether local government asked to have the burdens imposed on it or whether they were burdens which Governments of different political persuasions and Private Members' Bills imposed on local government.
Each legislative measure imposed burdens which were probably not onerous, but over the last decade they have meant not greatly increased establishment of unskilled labour but a greatly increased establishment of qualified specialists, all of whom have pension rights. The process yet continues.
I doubt whether there is an hon. Member who docs not have a constant stream of letters from constituents asking for yet more legislation for the inspection of dog-breeding establishments and cats' homes. There is almost no limit to the amount of legislation which some well-meaning people would have us thrust upon local authorities, and very often the same people will write to us complaining about the increase in the rates. This process results in an accumulation of legislation over the years which at times of inflation of personal incomes achieves a momentum of its own.
Therefore, when colleagues say that we must cut down on local government expenditure, it would be helpful to think in terms of repealing some of the legislation that this House has passed when it has seemed more important to deal with some peripheral issues of the kind I have mentioned than to get local authority expenditure under control. That is the first matter which I regard as being of considerable significance.
The second point is that, as we transfer expenditure between central Government and local government, from the point of view of the command upon our national resources and the inflation-generating propensities it is meaningless. It does not matter whether we transfer them from local government to central Government or from central Government to local government. The command on the resources is the same.
We must all know of cases where priorities have gone mad. Although trunk road expenditure theoretically is central Government-controlled, we all know that the county councils act as agents for the central Government. In my constituency, at Beare, just outside Broadclyst on the A38, within 200 yards of the immense expenditure on the M5 motorway a massively expensive programme is being conducted to straighten out kinks in the A38 which will become a local service road within a year, when that section of the M5 is opened. For years this has been the main trunk road to the West, and when it is about to be replaced by a motorway an expensive programme of improvements is under way. This is the sort of nonsense which we must bring under control if we are serious in talking about avoidable waste.
I am all in favour of capital expenditure on trunk road programmes. Whenever Select Committees of this House have asked business men who have brought new industries to peripheral areas what it was which had the most influence on them— whether it was shadow factories, cheap loans, regional employment premium or what—the most insistent positive answer has been good road communications, simply because they have a permanent effect on costs and do not go away when the Government changes. They are facilities on which reliance can be placed.
In the South-West we have a specific problem which is not general to the United Kingdom. Just as the electricity boards suffer severe rises in their costs in having to make the capital provision for peak demand which is unused for much of the time, so the South-West, being the principal holiday area of England outside London in terms of numbers, has to make quite extraordinary capital expenditure to provide for the water requirements of holidaymakers for only 10 or 12 weeks of the year, although the holidaymakers come there at times when water is shortest in supply.
It is not true to say that everyone in the area benefits from holidaymakers going there, so why should they pay for it? Quite a small percentage of people in the South-West benefit from holiday visitors. For many people tourism is their livelihood, but it is a quite small percentage of the people living there. For most people it means extreme nuisance and disruption of transport facilities by road and rail. Then to have to pay the whole capital cost, and the income costs to service that capital, of providing the water supply and to a lesser extent sewage disposal facilities for this peak demand results in a situation in which we should think again about whether the burden should not be more evenly shared throughout the country so that those for whom these expensive facilities are provided when they go to the South-West on holiday at least share in the cost of providing them.
More and more as hotel costs rise—and they will rise with inflation—more and more both as a percentage and quantitively, holidays will be taken in caravans. Caravans have the worst effect on any environment to which they come in holiday times. They constipate the road system and by the resultant road congestion they add desperately to the costs of local people earning a living. They bring very little income and generate little employment in the area to which they come. They put local authorities to great expense in the provision of car parks which have very low utilisation for 35 weeks of the year. Local authorities dare not make economic charges for their use in the holiday period lest those with caravans park on roadside verges instead ; and it is not practical to police against that.
This is another example of the tremendous burdens that fall upon an area which is attractive to the vast majority of people living outside it to come to as a holiday area. Other parts of the country have this problem as well but it is particularly acute in the South-West because, of the whole of England outside London, it is that area which attracts the greatest number of holiday visitors.
Public transport has been alluded to, but, good heavens, private transport is of crucial importance as well, as is the road system on which it runs. Maintenance expenditure has now fallen to such an extent on unclassified roads that many of them are physically deteriorating month after month. This can be seen as the edges are breaking up, and there is simply not the funding available even to preserve them in their existing condition. The Registrar-General's last return showed that in my constituency 42 per cent. of the people who were gainfully employed travelled to work by car or motor cycle, and there are many people in the large towns who walk to work. This shows how crucial is the road network.
Local authorities have many problems in trying to contain their own expenditure. I mentioned earlier some of the extra obligations which Government and Parliament have thrust upon them. In my view, the new organisation of the National Health Service is a great improvement on the previous one and it involves much greater participation by local government in the whole health structure. This is entirely desirable but it also imposes a greater load on local authorities which has to be paid for.
Pending the outcome of the Layfield inquiry on local government, I certainly favour the greatest possible transfer of the taxation load from the rates to central Government purely for the reason that at this time the central Government distributes its burdens more fairly than local government taxation, because local government taxation is entirely a property tax: it is entirely unrelated either to capacity to pay or to benefits received, and it misses out a good half of the population who in law are not occupiers of the property. It is therefore an extremely inequitable form of taxation.
At this stage I should like to make a plea to the many people and bodies who write to us criticising the present system

of local government finance that they should make their recommendations to the commission of inquiry considering this subject in the Department of the Environment while that commission is still taking evidence instead of merely criticising its report afterwards. Now is the time for people to make their recommendations to the Layfield Committee, and that time will not last for ever. Perhaps the Minister can tell us its closing date for taking evidence. I do not happen to know off the cuff. This is something that the public should be told, so that those who have a constructive view to put are not overtaken by the arrival of the last date for putting it.
The burden of increasing rates has hit a large section of the community at a time and in circumstances when they have been able to make least provision to meet it. This applies particularly to the self-employed. As the cost of living increases faster than they have the means to increase their incomes, their rates are bounding on ahead, as are their national insurance contributions, electricity and gas charges and maintenance costs, and there is likely to be a cascade collapse of this indispensable sector of our economy.
When we think of domestic rating, we should remember how many dual-purpose premises there are in which, for instance, the plumber and the cobbler live but which are also the site of their business and for which they pay more than the normal domestic unit. When one thinks of the self-employed, one thinks mainly of those with shops. They are part of it, and of course their houses are more highly rated if they live over them than if they were merely domestic hereditaments.
These people are likely to be squeezed out over the next 18 months because they have no resources on which to draw and at present rates of interest they will rapidly become uncreditworthy. It is no help to borrow money from a bank if the use to which one puts the money does not generate the interest one has to pay on it.
We must therefore consider the devastating problem of increasing rates not just in isolation but in the context of the compression between other dramatically increasing costs and the whole spectrum of personal incomes—this is most acute with those on fixed incomes and those who have retired—which cannot accelerate


even at a significant percentage of the rate at which these costs are accelerating.
Therefore, with the best will in the world, a large proportion of the ratepayers suddenly will not be able to pay their rate demands—not because they have not the will, but because they have not the means to do so. More and more they will have to ask the local authority to spread their rates over 10 months, and half way through that period they will receive the next rate demand for the second half of the year. On top of that come the increased fuel bills and insurance premiums on their homes.
Local authorities then have to borrow money because they are not getting the income to sustain the cash flow they need, apart from the annual sum that they have to raise. Then they have to raise further rates to pay the interest on the current account loans which they have had to borrow because their ratepayers have had to spread payment over many months. This is the cascade of problems which has arrived at the same moment.
I ask the Minister again to give particular thought to the burden of the capital expenditure on water in areas which have to provide such a high proportion of their capital expenditure not for their own residents but for the peak needs of holiday-makers, who do not effectively contribute to the rates but for whom those facilities are indispensable, because a water tap does not discriminate between local residents and holiday visitors. This is probably the greatest single problem in my area, but I know that there are other constituencies in which it is also particularly acute.

8.50 p.m.

Mr. Ted Leadbitter: At times this House in its natural anxiety forgets about the nature of a problem which faces it. In this case we are talking about a service that is unique in the world. In local government I have met the most outstanding people of great professional integrity and dedication to the service of the public. It cannot be repeated too often that they work probably more than any other section of the community in providing services which, compared with what we pay, can only be regarded as cheap. On the other hand, we have people who are very much taxed, who have many personal and

domestic problems and who are living under pressures and stresses which the media imposes upon them.
There is, therefore, a natural and understandable conflict. On the one hand we want certain things out of our community, and on the other hand it is difficult to see how we can pay for them. But I often feel that the House of Commons— which is also unique in the world, but because it is a human place—makes the mistake of looking at each subject in isolation.
For example, we recently discussed the police. We all agree that it is essential to maintain the excellence of the standards of the police service. But it has to be paid for. As I understand it, the amount of financial support that we are debating is to take account of a possible increase in the police strength of 1,000—a likely increase of 1 per cent, on the present strength of 100,000.
We spoke in that debate of the under-manning and of the stresses and strains on the Metropolitan Police. In the general context of Northern Ireland and the IRA, the police are under extreme pressure. Therefore, as a House of Commons, if we are to give guidance to anyone in the United Kingdom, it is that we have to pay for the police force that we need in order to provide the services that the country wants. Such argument can be applied also to education, for example, and the library service.
I was appalled to hear it suggested that those who take out fiction books from our libraries should pay. The corollary of that is that, as pedestrians, we might have to pay to cross the road. It is not a sensible argument if we are thinking in terms of developing the whole local government service.
We must face the dilemma as seen by the local government service. I would rather not talk in terms of economics unless we define clearly what is meant. Once we do so several matters arise. First, to re-expand services will obviously cost more money. Second, there is a danger of cutting the wrong services. In a democratic society there are powerful individuals in local government who jealously guard their services. If they happen to be the stronger element they will protect their services. Others might be unfortunate and be dealt with in an undesirable and excessive manner.
Instead of referring to economies, I would rather imprint value for money upon the minds of local and central government. That is the test. When we talk about value for money we begin to talk about efficiency. When we talk about efficiency we immediately begin to consider how to deal effectively with the problems now arising in local government.
I was a member of the Committee that considered the Local Government Bill. Heaven knows how many times I pleaded with the Conservative Party to take care. It did not do so, and we are now dealing with the problems resulting from that lack of care. It underestimated the costs of its proposals. That is why the increase order is now before us.
Since March of this year, the Labour Government have been outstanding in their presentation of remedies. We had to deal with the domestic element straight away. Further, we dealt with an improved rebate scheme. We eventually produced a handsome rebate which went a great way towards satisfying the ratepayers. Having done so, we still have to present this increase order which provides another £350 million.
That is to be set against what the Conservative Government did in underestimating the costliness of their proposals. That applies irrespective of what the hon. Member for Daventry (Mr. Jones) said when he objected to a reference to the Local Government Bill. It is the blatant truth.
In addition to the increase order my right hon. Friend has brought before the House the new rate support grant order. The Exchequer element of local government expenditure has been increased from 60·5 per cent, to 66·5 per cent. That is the fourth step this year towards improving the situation.
But to return to the instruments for dealing with the problems of local government, I remind the House that they are far more positively at hand. The time has come when, in addition to taking up the Layfield Committee's report, we should undertake immediate discussions with the local authorities to see how we can recreate the more pronounced efficiency levels we once enjoyed in local government, because they have been blurred by the reorganisation.
I give an example. Last year I could write to an official in my constituency

and get an answer within a week. When I have to do that now, the official has to send his reply to the county, the county secretariat has to send it to the head of the department, he has to send it to his deputy director, and he has to send it to his assistant director. When he has signed the answer provided by the person to whom I first wrote, it comes back down the chain again and three weeks later I receive it. That is inefficiency.
We should look at the whole of local government reorganisation again and try to give the non-metropolitan counties especially some more work to do so that they can deal with problems affecting their people far more efficiently and readily.
I hope that the local authority officials and councillors will respond to the example set by the Government and see how best to keep within the general limits of public expenditure without damaging services. I hope that they will try not to work in separate committees but will form policy committees in which the chairmen of all other committees can get together and can say distinctly "We are charged here with a Government recommendation whereby we can improve our services, rather than sit round a table asking whether we can cut this or cut that". If we can achieve such a harmonised approach in the physical reorganisation of local government, with the co-operation of the present Government, I am certain that the despondency expressed by the Opposition will not be weighed heavily by the country or by our local town halls.

9.3 p.m.

Mr. Hugh Rossi: It is clear that the Secretary of State very much took to heart the strictures I passed upon him in the last debate on rates when I suggested that he was too frivolous on a subject which was causing great anxiety to so many people throughout the country. So sensitive has he been on that score that he referred to my strictures on three public occasions. Today, he has dubbed me the Savonarola of the Conservative Party. If I recall my history correctly, what distinguished Savonarola was his strictures on the life style of the rulers of his State in the midst of poverty and on their frivolity in the midst of misery. So close to the mark did he get that he was sent to the stake. The rules were


determined to destroy him. I must say that, during the last General Election campaign, I had the most flattering attention from the whole machine of the London Labour Party.
Savonarola was distinguished also by the number of converts that he brought round to his thinking. Therefore, I was very gratified that, in his analysis of the causes of the high rates of this and last year, the Secretary of State eschewed completely the false alibis he tried to give himself in the previous debate and adopted instead the analysis I proffered to the House, namely, inflation in a labour-intensive industry, under-budgeting in the face of that inflation, heavy borrowing commitments, and inescapable commitments already entered into.
The right hon. Gentleman repeated all those arguments in this debate, and I am grateful to him for picking them up and being converted to their thinking. He even ended with a peroration asking for reduced local government expenditure. Even more satisfying for a Savonarola than conversion is repentance.
It would be churlish of me therefore not to recognise that the Secretary of State has both repented and done penance for his "Not as much as 100 per cent, increase" joke and has come forward with a rate support grant order and an increase order which has pleasantly surprised the local authorities associations. As far as I have been able to detect, there is no criticism by any of the local authorities associations of the size of the grant. There are, however, considerable misgivings concerning the distribution.
The County Councils Association has commented that the distribution is unfair and points out that there are six areas, two of them in Wales—and my hon. Friend the Member for Conway (Mr. Roberts) drew attention to this—which are receiving a share of the grant which is more than 5 per cent, less than last year. That will cause considerable difficulties in those areas.
In addition, London is particularly badly hit as a result of the maldistribution, and I have an interest in this since I represent a London constituency. As my hon. Friend the Member for Hamp-stead (Mr. Finsberg) said, the average domestic, ratepayer in London pays 50

per cent, more in rates than any ratepayer outside the capital. On top of that the estimated average increase over the coming year in London will be 40 per cent, as against an average increase of 25 per cent, in the rest of the country.
The hon. Member for Woolwich, East (Mr. Cartwright) identified some of the problems in London which give rise to this situation. He spoke of the home-lessness, children in care and the illegitimacy rate, and his arguments can be taken one stage further. With its effect as a magnet our capital city, because of job opportunity and because of the anonymity of the people coming here, attracts a great many of these problems from all over the country.
It would therefore seem to be right that London ratepayers, having to bear the burdens of others, should receive a more generous distribution of the rate support grant than the Secretary of State proposes to give in these orders. If it is too late now for him to do anything about this, may I urge him to ask for some rethinking within his Department as to the peculiar and difficult position of London and the burden upon the London ratepayers?
Another matter upon which a number of my hon. Friends commented was the lack of guidance to local authorities over the savings they will be required to make in expenditure. The Secretary of State said that he expected them to make these savings. My hon. Friend the Member for Daventry (Mr. Jones) called out for cuts in expenditure. My hon. Friend the Member for Southend, West (Mr. Channon) referred to the economies in the White Paper on the rate support grant and suggested that these were extremely vague, in some respects contradicting Government policy in other matters. He referred specifically to the nationalisation of land, the burden this will throw on planning establishments and the fact that the White Paper referred to cutting back on planning establishments.
Thus a great deal more thought is needed on cuts in local authority spending and I would urge the Secretary of State to produce his promised circular as soon as possible because local authorities are in the midst of considering their new rates for next year and if the circular is to be of any value to them


they should have it now. As my hon. Friend the Member for Reading, North (Mr. Durant) suggested, it would be more than helpful to the local authorities' associations if the Secretary of State would enter into consultations with them about the suggested cuts.
The hon. Members for South Shields (Mr. Blenkinsop), Cornwall, North (Mr. Pardoe) and Hartlepool (Mr. Leadbitter) spoke of the effects of reorganisation on local authorities and spoke about the large staffs. I do not propose to go over that ground, because we answered the point adequately in our last debate on the rating system. But I point out that when commercial firms amalgamate they rationalise their staffs and reduce the size of those staffs. That is the point of amalgamation of commercial concerns. Regrettably, that does not seem to have happened with local authorities. One establishment has been piled upon another.
It is for that very reason that my right hon. Friend the Member for Crosby (Mr. Page) when in office asked for an investigation into the way in which local authorities created their establishments and the salaries they started to pay. Where is the report? We asked for it in the last debate, and are still waiting for it. I hope that the Secretary of State will present at the earliest opportunity the results of the investigation ordered by my right hon. Friend.

Mr. Leadbitter: I am surprised at the hon. Gentleman. Is he not aware that the right hon. Member for Crosby (Mr. Page) was warned about the problem in Committee in 1972, and took no notice? He only asked for the report when it was too late.

Mr. Rossi: The hon. Gentleman tempts me to go over the ground that we argued in the last debate. Need I point out to him again that it was his Administration that set up Redcliffe-Maud, with the fatal defect of not including the financial implications in the terms of reference? That is why we are in the difficulty today. How many times does one have to repeat it before it sinks into the minds of some Labour Members?
Other hon. Members have spoken about the wide variation from the 25 per cent. average increase. The Secretary of State has admitted this. Some hon. Members

have asked that there be a safety net. If the Secretary of State finds that there are local authorities suffering an increase greatly in excess of the 25 per cent., will he make proposals to help the ratepayers concerned?
Perhaps the most curious part of the Secretary of State's speech was his reference to the rate of inflation and his refusal to give the House or local authorities any guidance. He called to task my right hon. and learned Friend the Member for Hexham (Mr. Rippon), because, on the best figures then available from the Treasury, my right hon. and learned Friend suggested last January that there would be a 9 per cent, inflationary increase in rates, taking into account the variable domestic rate relief that he proposed to give to the local authorities.
That 9 per cent, was part and parcel of the concept of the variable domestic relief, which was intended to be geared to bring down the increase. The Secretary of State abolished the variable domestic rate relief, which would have given him flexibility to assist areas where the increase will be beyond the norm of 25 per cent, that he posits now.
One finds it not surprising that, because he has removed from himself the opportunity to be flexible in that way, the right hon. Gentleman refuses to give any estimate of the probable inflationary increase next year, although I am sure that the Treasury must have those estimates and that they have been passed on to his Department. He is fully apprised of those estimates. But he was rather coy in giving them to the House in case he gets his leg pulled this time next year.
Perhaps that is understandable, but we must ask the right hon. Gentleman how can local authorities budget their rate if they cannot obtain any guidance whatsoever from the Government, who are the body best placed to give estimates of this kind. If local authorities receive no guidance at all and, as a result, seriously underestimate the inflationary figure for next year, would it not be right for them to come back this time next year and to say to the Secretary of State that he had said that the £350 million was a once-and-for-all payment, but he had put them in this position for the second time running and must now give them another £350 million, or whatever the equivalent would be, because he


refused to give them the necessary guidance in their budgeting?
We shall remind the right hon. Gentleman about this debate next year when we see what position the local authorities are then in—

Mr. Tomlinson: Do you not agree that my right hon. Friend is having to give £350 million extra this year precisely because of the guidance, given on the best Treasury information, that your right hon. and learned Friend had available to him on 22nd January this year?

Mr. Deputy Speaker (Mr. George Thomas): Order. The hon. Gentleman was bringing me into the debate.

Mr. Rossi: I referred a moment ago to the effect of the right hon. Gentleman abolishing the variable domestic rate relief, and the fact that this exacerbated the situation so much that he was forced by this House—we defeated him—to give relief, simply because he had played around with the domestic rate relief. Minority Government, it seems, has some advantages for the minority.
The debate has emphasised that despite the help that the Secretary of State is able to give to local authorities this year, acute problems remain in the rating system. The distribution of the rate support grant is one of the problems that has been highlighted in the debate. The difficulty in cutting back public expenditure and the defects of the system will mean that, despite the aid we are discussing today, many people will suffer again next year because of the rating system. Therefore there must be reform, and it must be urgent reform.
My hon. Friends the Member for East-leigh (Mr. Price) made a thoughtful speech in which he analysed the figures in the White Papers now before us, which he accurately described as dull and difficult-to-understand technical documents. We are talking in terms of £8,000 million, a figure which it is difficult for the mind to take in. But it is not hard for the mind to take in the impact which the rate demand will have on the average ratepayer in the coming year.
A number of my hon. Friends, particularly my hon. Friend the Member for Eastleigh and my hon. Friend the

Member for Reading, North, spoke about the small shopkeepers to whom no especial relief is being given, and thus many of them face bankruptcy.
In conclusion, I echo the request of my hon. Friend the Member for Leominster (Mr. Temple-Morris) that the Secretary of State should do all he can to hurry the Layfield Committee in its work so that as soon as possible, we can study its findings upon the defects in the rating system, which are obvious to us all. Then the House may set about the business, as quickly as possible, of replacing the present inequitable rating system with a system that will charge people according to their ability to pay.

9.20 p.m.

The Secretary of State for Wales (Mr. John Morris): I am sure that the House has enjoyed the speech of the hon. Member for Hornsey (Mr. Rossi), particularly the earlier part of it. There was more than a touch of levity in it. He complained about the joke-cracking ability of my right hon. Friend the Secretary of State, but I thought that at one point the hon. Member's speech was becoming positively hilarious, especially when he came to defend his party's record on the high cost of local government reorganisation.
As the House knows, and as the ratepayers know to their cost, the hon. Gentleman was attempting to defend the in-defensible. I was interested to hear him complain about a report which had been commissioned, as a sort of death-bed repentance, at the time when his right hon. Friend the Member for Crosby (Mr. Page) was in office. That report was no doubt commissioned when the right hon. Gentleman saw the results of local government reorganisation.
I shall be corrected if I am wrong, but I believe that the hon. Member was referring to the report produced by the Local Authorities Conditions of Service Advisory Board. This is the report which analysed what had been done and the increases in staff in various parts of the country. Happily, this report was placed in the Library earlier this year. It is available for the hon. Gentleman to peruse when he has the opportunity. I thought that from time to time he had his tongue in both cheeks when he was criticising my right hon. Friend—

Mr. Pardoe: For the sake of the Conservative Front Bench I had better make it clear that I do not think that was the report to which the hon. Member for Hornsey (Mr. Rossi) was referring. We have all read the report to which the right hon. Gentleman referred. I quoted from it extensively in my speech. The report to which I think the hon. Member was referring was one which the Pay Board had been intending to make. We do not know where it is because there is no Pay Board to report on this.

Mr. Morris: I am glad that the hon. Member is taking over the mantle of defender of the Conservative Front Bench. I am sure he is able to do it very well.

Mr. Rossi: Mr. Rossi rose—

Mr. Morris: Perhaps I may finish my sentence. If the hon. Member wants to supplement the point a little, the House will be interested to listen.

Mr. Rossi: I was watching with amusement as the right hon. land learned Gentleman dug himself a pit in speaking about the wrong report.

Mr. Morris: I gave ample opportunity for the hon. Member to correct me if I was wrong. He did not seek to do so. This is the trouble with the hon. Member. He realises the great responsibility he and his party bear, but there is a touch of amusement about everything he wants to say.
There has been a quite different atmosphere about this debate compared with the debate we had in March. It would be fair to say that my right hon. Friend has been congratulated in varying degrees on the support he is providing next year for local authorities. There has been a little criticism about the way it has been divided, but the totality of the grant has been welcomed. I have not heard any statement to the effect that in all the circumstances the total grant should be increased. By increasing the percentage from 60·5 per cent, to 665 per cent, my right hon. Friend has brought record help to local authorities in a situation where help is badly needed. That is why it has been welcomed right across the board in local government.
I find very odd the various schemes suggested by the Opposition during the election campaign and since for the

financing of local government. It is no use Opposition spokesmen complaining about the terms of reference of the Lay-field Committee. They had the opportunity to do something about local government finance. Almost on the eve of the General Election a whole series of quickly-thought-up and botched-up schemes was produced with the object of trying to distract the attention of the electorate. Of course, they carried no credibility.

Mr. Charles Morrison: Is the right hon. and learned Gentleman giving a categorical undertaking that the Labour Government if they remain in office, will not introduce something similar to the Conservative Party proposals in the last election manifesto?

Mr. Morris: The hon. Gentleman will have heard of the Layfield Committee which is investigating, with wide terms of reference, the whole rating system. The hon. Member for Tiverton (Mr. Maxwell-Hyslop) spoke of the evidence being given to the Layfield Committee. It is hoped that the evidence will be available in the course of the spring. The committee will not close its doors thereafter, but it expects that the bulk if not the whole of the evidence will be available by then. The committee wants to complete its inquiries and report by the end of the year. That is the speed with which the committee is tackling the problem.
The Government hope that the average domestic rate increase next year will be in the region of 25 per cent. Of course there will be variations, and I would be the first to concede that. It is an indication of the satisfaction of right hon. and hon. Members on both sides of the House that the temperature of today's debate is wholly different from that of our March debate and that so little criticism has been made of my right hon. Friend. Were it not for the measure of assistance given, coupled with the special addition in the increase order, the rate of increase next year would have been in the region of 70 per cent. The figures make allowance for the fact that our special relief scheme announced in July will reduce many householders' rate bills this year.
Only a couple of years ago a 25 per cent, rate rise would have been inconceivable. Since then there has been a sharp increase in all the costs borne by


local authorities, for instance, for building materials, road materials, interest rates and, above all, manpower. Staff costs are considerable because local government is so labour intensive.
The hon. Member for Eastleigh (Mr. Price) wanted to know how our proposals were made up. Local government has to deal not just with pay and prices but with high interest rates. During the period of inflation, local authorities have had to do a great deal of short-term borrowing. Inflation hits local authorities hard because of its labour-intensive situation. I am advised that there has been a 100 per cent, increase in some road building materials. We have sought to make allowances for all these costs.

Mr. David Price: Do I gather that my figure of 20 per cent, which I used as being the year's inflation—I suggested that there might be a shortfall of over £1,000 million—is accounted for by the other increases that have been substantially more than the 20 per cent, which I took as being the general average of inflation?

Mr. Morris: The hon. Member for Eastleigh, in a thoughtful speech, was generally correct. We have sought to meet extraordinary expenses which have been carried by local authorities and which generally are out of line with costs which other people have had to carry. We have given some examples, although they are not exhaustive. However, they give an indication of the high degree of additional expenditure undertaken by local authorities which we have tried to meet.
I was asked about the Houghton award and the manual workers' pay increase. The present settlement takes account of the burden on local authorities resulting from these pay increases. The central Government will bear their share of the burden in any increase orders that may be made.
The hon. Member for Daventry, with his substantial local government experience, raised the problem of economies and the need for advice. The hon. Member for Hornsey also mentioned those problems. We are conscious of the need to give local authorities helpful and detailed guidance on how the reduction in the rate of growth can be achieved. We shall be issuing a circular before Christmas setting out speci-

fic and detailed guidance. Every Minister is conscious of the need not to impose fresh burdens on local authorities.

Mr. Rossi: Will there also be full consultations with the local authorities?

Mr. Morris: There have been consultations with local authorities. They are anxious to have guidance, and therefore we shall be carrying out their needs and meeting the hon. Gentleman's request. My right hon. Friend is always ready and available for consultations. However, at this point of time it is not consultations which are required but the views of the Government on how local authorities should act.

Mr. Arthur Jones: Will the recommendations talk in capital terms or in current terms of expenditure?

Mr. Morris: We are dealing with the rate support grant—in other words, with current expenditure. That is the basis of the guidance that will be issued.
I was asked about the starting point in terms of various authorities, which may vary as regarding existing staff, and the need for some flexibility. We feel that it is an essential feature of the rate support grant settlement for 1975–76 that local authorities should provide for no extension in present total staff numbers beyond small increases necessary to meet inescapable commitments. Central and local government will institute joint arrangements for keeping a watch on local authority staffing, but it will be for individual local authorities to decide how to allocate their staff resources in a period of restraint. So far as it goes, I hope that that will provide the necessary flexibility which has been urged upon us.
I was asked whether the Government estimate of a 25 per cent, average increase in rates took account of the July special rate relief scheme. I think that my right hon. Friend answered that point in the affirmative in his speech earlier in the debate. As to distribution, no scheme is perfect, and certainly no scheme would meet with a unanimity of welcome from all parts of the House. One hon. Member some years ago, in view of certain criticisms which had been levelled on that occasion on a rate support grant system, thought that there would be less criticism if the Secretary of State chartered an aircraft, loaded it with gold, took it over


the various local authority areas and, according to his fancy and what he saw beneath him, handed out large amounts of gold.
Some of these schemes have been the object of criticism in the past. What we have done this time is certainly an improvement on what was done in the past. I think that speeches today have indicated that the differences and objections are very much less than they were previously.
First, it is right to point out that the basis of the formula is fairer. This time we have been looking at the new local authorities' expenditure estimates for 1974–75, not at what the old local authorities spent in the past year. These estimates are more up to date and avoid all the problems of apportioning figures to one area which originally related to a somewhat different area. Besides, in our calculations we have adjusted the figures to avoid penalising low-income areas.
Secondly, we are using better social indicators. The 1974–75 formula included something called a "personal social services unit" based on the numbers of social workers, home helps, and so on. That was not an indicator of social need at all. It measured what authorities were doing about their social needs. That is a completely different matter which depends as much as anything on what the authority can afford to spend. Therefore, this year we are using indicators of general social conditions: high population density and population decline, which are generally symptomatic of stress areas, and the numbers of elderly people living alone who not only place a substantial demand on the social services in themselves but tend to be concentrated in areas of poverty and deprivation.
Thirdly, next year we shall be getting rid of the so-called "high cost weightings" which the last Government added to the formula at a very late stage. These gave more money to the inner and outer South-East counties and the outer West Midlands, but not, be it noted, the West Midlands conurbation. We sought in vain at that time for some explanation why goods and services were supposed to be cheaper in Birmingham than in Bromsgrove.
Fourthly, we are giving more help to London. I realise that my hon. Friend

the Member for Woolwich, East (Mr. Cartwright) and the hon. Member for Hampstead (Mr. Finsberg) would like substantially more. I think that everyone agrees that London has unique problems. Indeed, that could be said in varying degrees about other parts of the country. Rate bills in London are very high. The previous administration included a 3 per cent, weighting in the 1974–75 formula— less generous than their inner South-East weighting.
This year there has been a substantial increase in the London and fringe area location allowances—far more than the authorities concerned had budgeted for in setting their rates. In the increase order we are making a special addition to the London grant and, to demonstrate our complete impartiality, to the grant paid to the counties round London which also had this new burden thrust upon them. Next year, too, London will have an 8 per cent, weighting as against the original 3 per cent, for the current year.
Fifthly, we are increasing the resources element from 27½ per cent, to 32½ per cent, of the aggregate of the needs and resources elements. This will benefit areas, including Wales, which are relatively poor in rateable resources. These are all improvements. While they will help many deserving areas, of course authorities elsewhere will do less well.

Mr. Wyn Roberts: Is the right hon. and learned Gentleman quite satisfied with the effect of the new formula on particular counties in Wales and other counties which are to have a decrease of more than 5 per cent.?

Mr. Morris: I am afraid that the hon. Member is living in a wholly different world. There is no decrease. Every authority in the country will receive a substantial increase, and the Welsh counties will receive a very substantial increase, amounting to about £90 million. I shall deal with the position as regards Wales in a moment. There is no decrease. The sooner the hon. Member washes that out of his mind the sooner he will begin to understand the position. We are talking of massive increases right across the country, which vary from one part to the other, as I am the first to concede.

Mr. Wyn Roberts: The fact of the matter is that the Welsh counties' share


of the grant is less for the coming year than it is for the present year. That has been pointed out very clearly by the County Councils' Association, which has declared its dissatisfaction over the matter. Is the Secretary of State saying that he is satisfied with the position?

Mr. Morris: The hon. Member should know that we are talking about the rate of increase, which varies from one part to another. Some of the Welsh counties and English counties are not receiving as much as some of the others. The amounts vary across the country, and hon. Members should take the whole picture into account.
I shall deal in a moment with the domestic rate relief, of which there has been some criticism by the Opposition, including the hon. Member for Cornwall, North (Mr. Pardoe) and the hon. Member Leominster (Mr. Temple-Morris).
If the hon. Member for Conway wants absolute parity, if Conservative Party policy calls for absolute parity on all these matters, he might say whether it is his view that there should be the same rate of domestic rate relief for his own constituency as, perhaps, for some of the English counties. Is that the hon. Member's view, or does he prefer a much franker and fairer way of looking at the whole picture and not of taking one tiny fraction of it?

Mr. Wyn Roberts: The Minister said that special attention would be paid to the low-income areas. Yet the Secretary of State knows that there are low-income areas within his own sphere of special responsibility, which is Wales, that are coming out of this rate support grant negotiation worse off in terms of their grant than they are at present.

Mr. Morris: I cannot convince the hon. Member, who believes that there is a diminution of the share. He is living in cloud-cuckoo-land. He has been present during only a small part of the debate and he obviously needs a great deal of education to inform him that we are talking about rates of increase. He has failed to respond to my challenge whether he would like parity. Perhaps he would like to consult the Opposition Front Bench about the matter. I understand why he refuses to rise to that bait.
In view of the intervention of the hon. Member for Conway, perhaps it would be convenient if I dealt with the Welsh problem in detail at this juncture. I note that the Opposition in their wisdom are not voting against our proposals tonight. I welcome their conversion compared with what they did in March when they voted against the proposals. In March I noticed that not one Conservative Member of Parliament from Wales voted against us. Indeed, nor did the nationalist Members, because they were very pleased with what had been done. We have sought to build upon that. There has been criticism from people on both sides of the Welsh border, some of whom say that we have done too much for Wales whereas others say we have done too little. It seems that our proposals are absolutely right. They are fair and equitable, and they meet the reality of the situation.
If I may try again to persuade the hon. Member for Conway that we are discussing increases, let me point out that Welsh householders next year will receive an increase of 2½p in domestic relief. Does the hon. Gentleman object to that? Does he regard that as unfair? Would he reject it on behalf of his constituents? I am sure that he would not. He will welcome it with open arms and resist the blandishments of the hon. Member for Cornwall, North when the latter wants to take it away from him. We have to look at the totality of the picture and not just at one little fraction where the hon. Gentleman feels hard done by and where he misunderstands the differences between decreases and growth.
I hope that the hon. Member for Caernarvon (Mr. Wigley) will take the message back to the fastnesses of Gwynedd that Wales will receive a higher amount of domestic relief than will England. The reason is simple. At the beginning of the debate in March of this year, I said, and I repeat today, that Wales has been given a high rate of domestic relief this year and again next year because of the overall total cost of local government and water reorganisation, which was higher on average in Wales than in England.
One can pick out one area just as one can pick out part of a settlement and suggest that one area is hard done by


compared with another. But, taking the totality of the picture, our conclusion was that there was a need for this higher level of domestic relief. If it gives pleasure to some hon. Members not from Welsh constituencies, the gap has somewhat narrowed for next year. We believe that it is needed, that it is right and that it meets the situation in Wales.
I have heard quotations from the hon. Member for Merioneth (Mr. Thomas), who is not here today. He has been quoted by the Western Mail as saying that Gwynedd was likely to get £2 million less in rate support grant next year than this year. Obviously he has persuaded the hon. Member for Conway along similar lines. The hon. Member for Caernarvon has made a similar claim in this House. The hon. Member for Carmarthen (Mr. Evans) has been even more extravagant in referring to the position in Dyfed.
Precise figures for rate support grant will not be known for some time, but the Department of the Environment has now sent to all authorities sufficient data to enable them to work out their grant entitlements. However, provisional figures show that, because of the Government's very generous grant settlement, all authorities in Wales will get very substantial increases in grant next year more than making up for the inflation which has taken place since 1973.
Some critics have led themselves astray because they have concentrated attention on the ordinary sparsity and the super-sparsity factors in the needs element formula. It is true that these factors for 1975–76 are rather less generous than those for the current year. But at one time it looked as though there would be no super-sparsity factor for next year. The fact that one is to be included is of real advantage to Dyfed, Gwynedd and Powys.

Mr. Wigley: Will the right hon. and learned Gentleman explain how it is that, given the sparsity element which in Gwynedd means about £300,000 or £400,000, and the super-sparsity element on top of that of £500,000, making a total of £900,000, he can say to his right hon. Friend the Member for Anglesey (Mr. Hughes), as he did yesterday in a Written Answer, that the sparsity element would be more than £3 million for Gwynedd next year?

Mr. Morris: If the hon. Gentleman will be patient, I will give him the full figures. Those are the figures which I gave in the course of that answer which I thought would have been welcomed by the hon. Member and would have done away with the picture of gloom which has been paraded from one end of North-West Wales to the other.
It was a decision of Ministers to ensure the super-sparsity factor, but this did not emerge from the working party with local government. There is also provision in the needs formula for next year—and I would have thought the hon. Gentleman would have welcomed the way in which Ministers have ensured that this operates to the benefit of his constituency —to distribute part of the grant on the basis of this year's formula. This will give rural counties some continued advantage from this year's sparsity factor.
I am advised that the end result is that the rural counties will not suffer anything like as much as some people have feared from the changes in the sparsity factors. Indeed, it seems likely that Gwynedd and Dyfed will get a little more money from these factors. Let me illustrate the case of Gwynedd. In 1974–75 Gwynedd will get just under £3 million on account of sparsity of population. In 1976 Gwynedd will probably receive about £930,000 from the new formula plus 71·3 per cent, of their 1974–75 sparsity entitlement, giving them a further £2,100,000, a little over £3 million in all.
I emphasise that these are provisional figures, but it appears that the rural counties will not do so badly out of the sparsity factors next year, although I acknowledge that they will get rather less out of these factors than in 1974–75 if the increase order as well as the original settlement is taken into account. That is the answer to the criticisms that have been made.
Some critics have complained that there is no low income factor in the needs element formula. This complaint, too, is based on a misunderstanding. The Government Departments and local authorities' associations found in their work on RSG this year that authorities with a high proportion of low income households in their area tended to spend less, other things being equal, than those elsewhere, although their true need to spend clearly


cannot be less. We have made a correction for this by adjusting the expenditure figures of those authorities upwards in the course of the statistical analysis on which the formula is based. This will stop the formula from working unfairly to the disadvantage of low income areas even though numbers of low income households do not specifically appear in the formula.
I hope that this will be an encouragement to the hon. Member. In any case, it is misleading to look at separate parts of the needs element formula. The RSG settlement must be looked at as a whole, and the total result will be as advantageous to Wales as it is to England. As far as the needs and resources elements are concerned, all Welsh areas will have bigger grants next year in real terms, not just in money terms—and I have given the picture as far as the domestic element is concerned.
In the present year, 70 per cent. of Welsh local government current expenditure is met from the Exchequer, and next year the percentage will be rather higher. I will give the figures: Dyfed this year, 70 per cent.; Gwynedd, 71 per cent. There is no complaint when one compares with the national average. For Powys it is 79 per cent.—I believe the highest figure in the country as a whole. It seems likely that the figures for next year will be rather higher.
Against that background, I cannot understand the complaints of hon. Members. It seems to me there are those who never can be satisfied when one compares this picture with the picture as a whole. If hon. Members want to argue, if they want to come back to national parity as regards the total domestic element, I shall be glad to hear from them, and their constituents will be even more pleased to hear their views. This is the picture. This is what we defend. I am sure from what local authorities generally have said that there has been a very general welcome from them right across the board for what we have done. I commend these orders to the House.

Mr. Channon: Before the Secretary of State sits down—

Mr. Speaker: Order. The right hon. and learned Gentleman has sat down.

Question put and agreed to.

Resolved,
That the Rate Support Grant (No. 2) Order 1974, a copy of which was laid before this House on 5th December, be approved.

Resolved,
That the Rate Support Grant (Increase) Order 1974, a copy of which was laid before this House on 5th December, be approved.— [Mr. Crosland.]

Orders of the Day — GENERAL RATE BILL

Not amended (in the Standing Committee), considered.

Clause 1

POSTPONEMENT OF NEW VALUATION LISTS

9.55 p.m.

Mr. Hugh Rossi: I beg to move Amendment No. 1, in page 1, line 9, leave out from 'until' to end of line 10 and insert:
'either 1st April 1979 or 1st April 1980 as the Secretary of State may provide by order made by statutory instrument; and that section shall be amended accordingly'.
On Second Reading and in Committee we probed the reasoning behind the object of the Bill, that of postponing the next general rate revaluation from 1978 to 1981. We commented on the fact that during no Labour administration had any valuation ever taken place and that every time a valuation was due, some reason was found for postponing it beyond their period of office. The Secretary of State assured us, with his hand on his heart, that electoral considerations had nothing to do with their thinking. We accept that, for the purpose of the argument, at its face value, although we reserve our personal judgments on that situation.
We also asked whether the reason might be that the Labour Government's intention to nationalise the land would throw such a burden on the valuers that they could not undertake the work of nationalisation and revaluation at the same time. Again we were assured that that was not the reason for the postponement.
We were told that the reason was the setting up of the Layfield Committee to investigate the whole rating system. The argument was that, on the assumption that Layfield would recommend a change in the rating system, it would be a waste of manpower for the revaluation to continue meanwhile. We therefore asked about the timing of that committee and of any subsequent legislation, in order to test the proposal to postpone until 1981.
We were told at the first sitting of the Standing Committee that it was assumed that the Committee would take its full time and report "at about this time next

year"—in November 1975. The Minister went on:
There must then inevitably be the digestion of the report by the Government and, to some extent, by the Opposition, and by local authorities. All that would take many months, to put it at its most optimistic.
Legislation could not be introduced, therefore, until the autumn of 1976, and it could not become law until the summer of 1977. We are postponing revaluation in the Bill for a period of three years from 1978 to 1981." —[OFFICIAL REPORT, Standing Committee B, 19th November 1974; c. 8.]
We were not satisfied in Committee with that timetable. We pressed the Minister hard. The result was that he brought forward a concessionary date—namely, April 1980.

It being Ten o'clock, further consideration of the Bill stood adjourned.

Ordered,
That the General Rate Bill may be proceeded with at this day's sitting, though opposed, until any hour.—[Mr. Thomas Cox.]

Bill not amended (in the Standing Committee), further considered.

Mr. Rossi: That concessionary date is reflected in the amendment and in Government Amendments Nos. 2 and 3 which, I understand, we may also discuss.
We were grateful to the Minister for coming forward in Committee with that compromise and meeting our objections part of the way. But still we were not completely satisfied. We thought that there should be some flexibility so that if the Layfield Committee finished its work earlier than the Minister suggested, it might be open to him to bring forward revaluation to an earlier date. At another point of our discussions in Committee the Minister said,
Clearly, it cannot report this year, for we are in November now. I hope that it will report early next year."—[OFFICIAL REPORT, Standing Committee B, 19th November 1974 ; c. 10.]
That would be early in 1975 rather than later in 1975. If that were attainable the whole programme could be brought forward virtually a whole year. Therefore, instead of talking in terms of 1980 it would be possible to talk in terms of 1979.
It is for that reason that we have tabled the amendment. It states that the valuation instead of being on 1st April 1981,


as is in the Bill, or 1968, as is in Government Amendments 2 and 3, shall be
either 1st April 1979 or 1st April 1980 as the Secretary of State may provide by order made by statutory instrument ; and that section shall be amended accordingly.
That is the section in the earlier Act.
We are proposing to give the Minister the opportunity to choose either 1979 or 1980. It is clear that he is content with 1980. We are giving him the opportunity to choose either date depending upon the speed with which the Layfleld Committee can conclude its deliberations and the speed with which the Government can study its proposals and bring forward legislation. There is no obligation for the Minister under the amendment to select 1979 if he finds it too early. He will still be able to leave revaluation to 1980. He can select either of the two dates by coming to the House with an order made by statutory instrument. We are leaving the decision entirely to him, but we are giving him the flexibility which he has denied himself.
If there were the measure of good will in this matter that the Minister has tried to persuade us exists, and if the true explanation for the delay or postponement is only the work of the Layfield Committee, the Minister should readily accept a situation in which he is free to choose one of two days, depending entirely upon the speed of the Layfield Committee, and not to be hamstrung by an arbitrary, inflexible single date inserted in the Bill.

The Under-Secretary of State for the Environment (Mr. Gordon Oakes): I must ask the House to resist the amendment, and I shall ask it to approve Government amendments Nos. 2 and 3, which will change the date to 1980 in accordance with the consideration which I said in Committee would be given to this matter in view of representations made by the hon. Member for Hornsey (Mr. Rossi) and other hon. Members.
I repeat that the reason for the Bill is the uncertainty that must inevitably exist when an independent committee is considering the whole of the rating system and is due to report, according to its terms of reference, some time next year, but before the end of the year. In view of that situation, we do not want the time of valuers to be wasted in carrying

out a revaluation which may not be required.
Of course, the hon. Gentleman is right in saying that the revaluation may be required. We do not know what the Layfield Committee will come up with. It may suggest continuation of the present rating system as it is or with slight modifications. If so, we might then think it a pity that we had not proceeded with revaluation, but we must be prepared for the fact that the Layfield Committee may not make such a recommendation.
That is the reason for the Bill, and it is absurd for hon. Members to suggest, as the hon. Gentleman has done, that, in December 1974, I can know that, whether it be 1980 or 1981 or a subsequent year, a Labour Government will be in office and that I can now bring forward a Bill to postpone revaluation because I have such foresight. It is impossible for me to know any such thing now. I agree that I might be giving a valuable weapon to a future Conservative Government by this Bill, but that is not its purpose. The purpose arises from the considerations of the Layfield Committee and the uncertainty which exists now as to the future of the pattern of the rating system.
Amendment No. 1 would take the date from 1980 to 1979, with, as the hon. Gentleman has said, provision for the Secretary of State to choose 1980 if he thought it necessary. But I ask the House not to accept the amendment, because 1978 would normally be the next revaluation year, and if that date remained it would set in motion the preliminary work during this year. The valuers would now be doing preliminary work if the date were 1978. If the date of 1979 were fixed, the valuers would have to start work in the middle of next year, regardless of Layfield.
I said in Committee that we would look at the date 1980, and it is just possible for us to advance the date from 1981 to 1980, and that is why, following the concern expressed in Committee, the Government have put down an amendment accordingly. It represents the minimum postponement possible, and that minimum is to 1980 and not to 1979. The whole object of the Bill could easily be defeated if the date were 1979, because the revaluation work might well have to take place before Layfield reported, and


certainly before the Government had had the opportunity, with the local authorities, to consider the report in detail, otherwise they would never get the work done in time.

Mr. Ivan Lawrence: As I understand it, what the hon. Gentleman is talking about is the date at which valuers would have to start work and the need to postpone the starting of the work according to Layfield. Am I wrong in assuming that the process of revaluation is a continual process and that valuation officers are continually doing the job of revaluation? If not, what are the valuation officers doing at present?

Mr. Oakes: It is partly a continuous job of bringing up to date the process for new properties, and so on. That is taking place all the time. The valuers, as the hon. Gentleman will be aware, are extremely busy at present dealing with appeals against assessments. That is another aspect of their work. They are facing a mountain of work with regard to that alone. But with regard to the major valuation, this has to be done years in advance. Preliminary lists are sent out, and so on. Considerations of hypothetical rents go out. Differences between areas in respect of very prosperous districts for shopping, and so on, have to be considered.
It takes many years to do this. It is not a case of the valuers being able to settle down and provide a revaluation for the following year, or even the year after. If 1979 were the date, some time next year—probably fairly early next year—they would have to start work on it, and the whole purpose and object of the Bill would be rendered quite useless. The purpose of the Bill is to stop futile, useless work going on until we know what Layfield has reported and until we know what the Government intend to do with that report. We could not have both those things by early next year. That is fairly certain, even if Layfield reported early next year. We want the report at the earliest possible time.
Hon. Members should bear in mind that the Layfield Committee is a completely independent body. It is not a Government body. We must bear in mind that these are very busy people who sit on this Committee. They are very busy people doing very important things other

than sitting on the Layfield Committee. In view of the debate which took place in Committee and in the House, my right hon. Friend the Secretary of State and I have written to the chairman of the committee expressing the view expressed by hon. Members. He has replied pointing out the difficulty which his committee is in at present, bearing in mind its composition, and so on.

Mr. Lawrence: I think that it is implicit in what the hon. Gentleman is saying that there are some valuers at present who are working on revaluation, if not all of them, and that others are engaged in other processes. As a result of the introduction of this legislation, will those who are at present working on the process of revaluation stop doing that? What work will they do if they stop that work? To what work will they be transferred? Is the number of people who will have to be transferred from present revaluation work a significant or an insignificant number?

Mr. Oakes: When the hon. Gentleman says that revaluation is taking place, he should bear in mind that what is taking place is the continual up-dating of the list. That must inevitably be so when new property is built, and so on. The list has to be up-dated when extensions are added to property, and so on. What these people are doing, and what they will be doing instead of revaluation, is attacking the mountainous volume of work that they have at present in relation to appeals. I am constantly getting complaints from hon. Members—sometimes understandably—about the length of time it takes before an appeal can be heard. I assure the House that valuer's have more than enough to do without their doing what could be futile work.
The concession, which I made in Committee, to meet the very strongly expressed feelings of the Committee that perhaps we were taking a little too long in choosing the date of 1981, was to cut that down to the earliest date possible consistent with the valuers' time not being wasted. That was in order to meet hon. Members in their desire that the revluation should take place as soon as possible.
I ask the hon. Member for Hornsey to withdraw his amendment favouring 1979. I assure the House that I have done my best to bring forward the date


to a year earlier, but the earliest possible time would be 1980.

10.15 p.m.

Mr. Arthur Jones: We all recognise how accommodating the Minister has been in agreeing to the new date of 1980 instead of 1981, but I hope that he will understand the scepticism some of us have about the political content of his decision. I accept his personal statement, but the history of revaluations under Socialist Governments leads one to conclude that in the past these decisions have had a political content. I refer particularly to the cancellation of the 1968 revaluation. I am confident, from my knowledge and experience, that the late Richard Crossman was influenced by political considerations when that revaluation was cancelled. Although I accept entirely the assurance the Minister has given, 1 hope he will understand our scepticism.
I may be a little less charitable than my hon. Friend the Member for Hornsey (Mr. Rossi) in this respect, but that is explained by the fact that I was present when Richard Crossman admitted to the political content of the decision to defer in 1968. I accept that the time scale is not unreasonable. I would have preferred the Government to be a little more accommodating, but I know of the pressures that the valuation office is under with the appeals against rating revaluations that are in the pipeline. I had hoped that the Government would go that one stage further, and I feel certain that that would not have been in any way detrimental.

Amendment negatived.

Amendments made:

No. 2, in page 1, line 9, leave out '1981' and insert '1980'.

No. 3, in page 1, line 10, leave out '1981' and insert '1980'.—[Mr. Oakes.]

Mr. Rossi: I beg to move Amendment No. 4, in page 1, line 18, at end insert
'to whom the Secretary of State shall report upon whatever consultations he may have had with the representatives of the local authorities prior to the making of such order and in particular upon any representations made to him during such consultations concerning the possible effects of such order'.
This follows a somewhat similar amendment which we put down in Committee which was occasioned by representations we received from local authority associa-

tions when this legislation was sprung upon them by the Government without any real consultation. Hon. Members may recall that the first anyone knew of this proposal was a Press statement issued by the Secretary of State some time during September. That immediately provoked an angry reaction from the local authorities' associations which wrote to the principal secretary for the Department of the Environment complaining in strong terms that the announcement had been made without any consultation.
I think the reply the associations received—and I am speaking only from memory—was that the matter would have to be deferred until after the General Election that was then being considered as possible, and that in any case the Secretary of State did not consider it necessary to have formal consultations because he already knew what the views and reactions of the local authorities were likely to be to the postponement. He had therefore taken them as read when making his decision and deciding to go ahead with the postponement in the face of the objections that he knew would have been raised to it.
That was a somewhat arbitrary and high-handed action and that is why we are proposing an amendment which asks the Secretary of State, if he comes to the House for further deferments of the valuation list in 1980, to report upon whatever consultations he may have had with representatives of the local authorities before making the order, and particularly to report upon any representations made to him during such consultations concerning the possible effects of such an order.
The amendment is worded in such a way as to avoid the difficulty we ran into in Committee. Our amendment there was that no postponement should take effect until the Secretary of State had had consultations with the local authorities. It was correctly argued that that wording tended to take away from the sovereignty of Parliament, that in effect it would leave with the local authorities the decision whether there should be a postponement. We have tried to avoid that difficulty, which was the main objection to the amendment in Committee, by asking the Secretary of State to report to the House when his order comes up for discussion


by the House. Therefore, the last word will be with Parliament.
The amendment does not even require the Secretary of State to have consultations. He may have them or not have them, as he chooses. What he must do is to tell the House whether he has had them. Then the House will have to consider whether he has acted reasonably or unreasonably in making an order, and decide whether to confirm the order. The sovereignty in the matter will be there.
We are asking that, as well as reporting whether he has had consultations, the Secretary of State shall report what the local authorities have told him about the possible effects of his order, so that we may judge for ourselves the weight and validity of those representations. We are trying to give as much dignity as we can to both Houses in the matter. We are making clear to the Secretary of State what we would like to hear from him when he asks us for permission to make an order for a further postponement of revaluation.
It may be argued that it is not necessary to require the Secretary of State to report on consultations, because in a debate on such an order he will report anyway, or, if he does not, he can be questioned about consultations and will then explain to the House. I accept that that is possible, but it helps on occasions—in view of the criticisms of the Government by local authorities, this is such an occasion —if the House spells out to the Minister the approach it would like to see him make when he contemplates a course of action.
The amendment is no more than an indication by the House to the Minister that if he finds it necessary to seek a further postponement of the valuation list we should like to hear from him what consultations he has had, the results of those consultations, and in particular the representations made to him, so that the House can weigh up the pros and cons and decide whether the order should be approved.

Mr. Oakes: The purpose behind the amendment is the same as that which the hon. Member for Hornsey (Mr. Rossi) expressed in his amendment in Committee, namely that he wants to ensure that consultations take place and that the House knows of the consultations before

any extension of the order is made. I said in Committee that never before had local authorities been consulted on the question of revaluation in the way in which the hon. Gentleman meant, but that with hindsight it would probably have been better had we had discussions with the local authorities before the Press notice was issued.
But now we are concerned with the position for the future. The hon. Gentleman anticipated much of my reply when he said that the amendment may be regarded as superfluous. There are some slight technical objections to the amendment, not incidentally the same objections as we had to the earlier amendment moved by the hon. Gentleman which would fetter the House and which we therefore could not consider. We ask the House to reject this amendment because it is superfluous.
Let us consider the mechanism that would be involved if the Secretary of State exercised his power to make a further extension for one year. He would have to come to the House. This would be an affirmative procedure, not a negative procedure, and he could be questioned in the House about his reasons for making an extension. He could be asked what consultations he had had with the local authorities' associations. If the local authorities' associations had opposed his proposal he could be asked why he was seeking an extension in defiance of those associations.
The other leg in the hon. Gentleman's argument is that the Secretary of State should report to the House on the local authority representations, but inevitably he would have to do that in the course of replying in the House to questions raised by hon. Members. Furthermore, the hon. Gentleman knows, I know, and you know, Mr. Speaker, that the local authorities' associations are never slow in coming forward to tell hon. Members in some detail about their opinions on any particular piece of legislation which is to come before the House, or on any action proposed by the Secretary of State.
I do not think that there would be any fear that any hon. Member would not know what were the views of the local authorities' associations, because the associations would take great care to make those views known. No hon. Member need fear that the Secretary of


State could take action without first explaining his reasons to the House because it would be open to any hon. Member to ask for those reasons in the course of the affirmative procedure. I do not criticise the drafting of the amendment, but it is rather cumbersome and it is unnecessary, because protections are given by the procedure that is adopted before any extension for 12 months can take place. I ask the hon. Gentleman to withdraw the amendment.

10.30 p.m.

Mr. Lawrence: The Under-Secretary's reply does not at present convince me. I asked him in Committee whether he would make the sort of concession which we now seek, whether he would undertake that before any further local government legislation was introduced, at least during his term of office, he would have some form of consultation. The Undersecretary was good enough to say that he had some sympathy with what I was saying regarding the protests of local authorities about not having been consulted. In a letter to him the local authorities expressed dismay and anxiety about the position, and complained about the total lack of consultation. In Committee we did not get any assurance. There was talk about the semantics of the situation and about how inadequate our amendment was. The Minister was his usual, kind, pleasant, generous, tempting self and we decided that we would not press the issue because we felt that we had seen some sort of a glimmer of sympathy. Now we wish to give effect to that sympathy by changing to a more effective form of procedure.
We do not want to fetter the Government and prevent them from taking appropriate action but there is a need for a lever by which to control the Government if they do not wish to enter into consultation. What the Minister has been saying is that there is no need for the amendment, that it is superfluous because in the ordinary way of things he would come to the House and give us an explanation. That is the position now, yet the Minister has said that there were no consultations and the Government are sorry about it. That will not stop this legislation from being enacted.
We want to make sure that there is some stipulation ensuring that the feelings of local authorities will be considered prior to any changes of this kind in future. While the Minister has shown sympathy for the points raised on behalf of the local authorities, he proposes to do nothing to make a change. Instead, in his siren-like manner, he tempts us on to the rocks of withdrawing the amendment. That is not good enough.
This amendment is an expression of genuine feeling, not by one local authority but by the Association of County Councils, the Association of Metropolitan Authorities and the Association of District Councils. The entire body of local authorities are dismayed and anxious about the lack of consultation.
If the Minister will give us some reason for thinking that things will change, some commitment, I am sure that we will be willing to withdraw the amendment. Until such time as a commitment is given, I would be most unhappy about allowing things to remain as they are, particularly at a time when local authorities need to feel that the Government are on their side and that they are all pulling together to get us out of our troubles. There should be something more than an empty gesture.

Mr. Oakes: I can give the hon. Member the assurance which he is seeking. Things were somewhat peculiar in the autumn of this year. The normal course of events did not run. The election was coming up and there were all sorts of difficulties with a minority Government. There was no precedent for consulting local authorities.
They have made it clear that they feel extremely irate with us for not having consulted them. It would be an unwise Secretary of State who would come to the House and ask for an extension of 12 months without consulting local authorities in advance. He would risk the wrath of the House as well as that of the local authorities' associations. I think I can say, fairly safely, that a Secretary of State will consult the local authorities' associations if he proposes to ask for an extension.

Mr. Rossi: I am grateful to the Minister for that assurance. This allays our


fears. After that assurance, no Secretary of State would dare bring forward a revaluation postponement without full consultation. We have ventilated the matter. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.

Bill accordingly read the Third time and passed.

Orders of the Day — NORTHERN IRELAND (APPROPRIATION)

10.35 p.m.

The Under-Secretary of State for Northern Ireland (Mr. John Concannon): I beg to move,
That the Appropriation (No. 2) (Northern Ireland) Order 1974, a draft of which was laid before this House on 21st November, be approved.

Mr. Deputy Speaker (Sir Myer Galpern): I suggest that with this we take the following order:
That the Financial Provisions (Northern Ireland) Order 1974, a draft of which was laid before this House on 21st November, be approved.

Mr. Concannon: I shall deal first with the Approriation Order which is being made under Schedule 1 to the Northern Ireland Act 1974.
At the end of July the House approved an Appropriation Order which appropriated the main Northern Ireland Estimates provision of £618 million for 1974– 75. The Autumn Supplementary Estimate requires an additional £32 million bringing the total estimates provision to date for 1974–75 to £650 million. The draft order now before the House provides for the issue of the additional amount now required from the Northern Ireland Consolidated Fund and for its appropriation to particular services. Full details of the services concerned are contained in the Autumn Supplementary Estimate, copies of which have been available in the Library for some weeks.
Some of the additional sums required, as I shall indicate, represent increases in

real expenditure, others are the result of price or pay increases.
In Class III, No. 2, an extra £2·3 million is to be paid into the Northern Ireland National Insurance Fund which bears the cost of, amongst other things, unemployment and sickness benefits. The estimate is based on revised figures supplied by the Government Actuary and takes into account the increase in the rate of contributions which came into effect from 5th August 1974. In Class III, No. 4, additional provision of £3·5 million is required for non-contributory benefits. This is because supplementary benefits, old persons' pensions and attendance allowances were increased with effect from 22nd July 1974.
Of the additional provision of £12·4 million required in Class III, No. 5 in respect of the hospital and community services provided by the health and social services area boards, £9·9 million is for pay increases and £2·6 million for price increases.
Class V, No. 6, Agricultural Assistance Schemes, provides a sum of £1·5 million to be paid as beef subsidies under the beef marketing subsidy scheme. This scheme was introduced to maintain equality of trading conditions between Northern Ireland and the Republic of Ireland. As no provision was made for this expenditure in the main Estimates for 1974–75, it was necessary to advance the sum required from the Northern Ireland Civil Contingencies Fund. The purpose of this supplementary provision is to repay the advance. This item of expenditure represents a real increase in public expenditure.
In Class IX, No. 4, transport services, the provision of £1·7 million is mainly concerned with grants for Aldergrove Civil Airport and grants to bus operators to help maintain passenger services in the Province. Part of the additional provision is due to inflationary pressures and part represents a real increase in expenditure.
A grant of £800,000 to Enterprise Ulster to cover pay and price increases is by far the largest item in the extra £900,000 provision sought in Class X, No. 2, employment and training services.
The Government's decision in August this year to double the rate of regional employment premium to employers in areas of high unemployment including


Northern Ireland requires a supplementary provision of £5·1 million for Class X, No. 3. This constitutes a real increase in public expenditure.
Finally, the House may recall that its attention was drawn to a printing error in the Appropriation Order considered in July which did not, however, affect the total sum appropriated. Article 6 of the draft order corrects this error.
I shall now turn to the Financial Provisions Order. Capital expenditure on certain services, and lending by Government in Northern Ireland are subject to specified limits on total issues. These limits are increased from time to time. The most recent increase was made by the Financial Provisions Measure (Northern Ireland) 1974, but a review of the present limits has indicated that some of these may be reached during the present financial year or early next year. The provisions of this order extend these particular limits to cover estimated expenditure until 31st March 1976. It also introduces a formula for the calculation of capital available to the Northern Ireland Civil Contingencies Fund.
Article 3 and Schedules 1 and 2 would increase by a total of £34 million the present statutory limit on issues from the Northern Ireland Consolidated Fund for certain categories of capital expenditure by government. The items of expenditure concerned are grants under the Development Services Act, expenditure for industrial development, and grants and loans to industry. An increase in these statutory limits does not of course, mean that Departments can incur expenditure on these services up to the new limits without reference to Parliament. Within these limits, the approval of Parliament must be sought through the submission of Estimates and the consequential grant of Supply.
Article 4 seeks to increase from £450 million to £600 million the amount which may be outstanding from the Northern Ireland Government Loans Fund. The fund is a major source for borrowing by local authorities and other public bodies in Northern Ireland, and it is estimated that some £460 million may be outstanding from the fund by the end of this financial year. The National Loans Fund is the main source of borrowing for the

Northern Ireland Government Loans Fund.
Article 5 deals with the introduction in Northern Ireland of a formula for calculating the maximum capital that may be available to the Civil Contingencies Fund. Under this formula, the maximum capital available, including the permanent capital, would be 2 per cent. of authorised supply expenditure for the previous financial year. The proposed formula would automatically take account of inflation. Under it, the maximum capital available to the fund in 1974–75 would be £12·5 million. A similar formula was recently introduced in relation to the United Kingdom Contingencies Fund.
Schedule 3 provides for the repeal of Section 33C of the Exchequer and Financial Provisions Act (Northern Ireland) 1950. The purpose of this repeal is to remove the separate provision for the control of capital expenditure on school meals contained in this section, because the enactment of the Education and Libraries (Northern Ireland) Order 1972, which give effect to the reorganisation of local government, has applied Section 33 of the 1950 Act which covers various items of expenditure on schools, including school meals. The order does not itself vote or appropriate any additional expenditure. That requires further legislative stages.
Both these orders represent customary and necessary steps in the financial cycle, and I commend them to the House.

10.43 p.m.

Mr. John Biggs-Davison: Yet again, a limited number of right hon. and hon. Members are scrutinising, late at night in strictly limited time, millions of pounds of public money. We labour under a sense of powerlessness. My right hon. and hon. Friends have repeatedly complained, as I have, that our present procedure for conducting Northern Ireland legislation does not enable the Commons of the United Kingdom to do its duty to the public purse and the public weal.

Mr. Concannon: It is the same procedure as under the Conservative Government.

Mr. Biggs-Davison: I concede that it is not a matter against any particular administration. Our remonstrances.


although echoed in every quarter of the House, have so far got us nowhere. The Leader of the House has murmured about improved procedure and an Ulster Grand Committee, but we still await his proposals. My right hon. Friend the Leader of the Opposition gave him a needed nudge today at business question time.
Failing devolution, a regional assembly or other more satisfactory arrangements for the government of Northern Ireland within the Kingdom, the case is strong for an Ulster Grand Committee. The Scottish Grand Committee meets in Edinburgh as well as at Westminster, and I foresee that an Ulster Grand Committee could meet at Stormont as well as here. That would be an educational experience for some of those serving on the committee, but it would also demonstrate the interest of the House in the welfare of our fellow subjects across the water. But that is for the future—not too distant, I hope. Tonight, all we can do is put in our probes and seek elucidation. I follow the order of the Estimates and put some questions to the hon. Gentleman.
I propose to start with the dissolved Assembly and proceed thence to the defunct Executive and ask why the travelling expenses of Assembly men were so heavily underestimated. From £15,200 to £65,900 is quite a jump.
I was also attracted by the mention of expenses relating to the Commonwealth Parliamentary Association, to which I am devoted, as I know is the Under-Secretary of State. Ulster and, indeed, Ireland as an island have given much to the Commonwealth. Right hon. and hon. Gentlemen from Northern Ireland constituencies are welcome members of the CPA. I am not clear whether there is a Northern Ireland branch at this moment. What are the expenses incurred? Can it be that the offices of the Executive staff are being maintained as if the Executive still existed? What is the position of its accompanying civil servants?
Northern Ireland has had more than its share of the United Kingdom's agricultural depression. The £1½ million beef subsidy under Article 5 staved off disaster. Will the Minister tell us about cattle shipments to Britain? Northern Ireland depends heavily on her agricultural exports to keep up domestic prices which,

on average, are about £3 lower than in Great Britain. In particular, are better roll-on roll-off facilities being provided for the transport of cattle?
The expenditure on security arrangements includes an increase of almost £200,000 for Aldergrove Airport and an additional £500,000 under the security staff grants scheme. Is this increase of 35 per cent. in the estimate for security staff attributable to a rapid recruitment of additional officers—one understands the need for them—or to higher rates of pay and to the proportion of the Government's contribution?
It would be helpful if we could be given an estimate of the number of full-time security staff at present employed by businesses in Belfast and other centres and be told what assistance is given them to provide security for their premises whether by tax, rate relief or otherwise.
The £50,000 grant to the Belfast Harbour Commissioners appears somewhat unusual. Is it related to one of the cross-Channel ferries? To what use is the grant being put? Are the Government acting to continue the much valued Belfast-Heysham steamer service?
There appear to be estimated savings of £420,000 on expenses relating to tourism. In my view, tourism should largely be for private enterprise and private initiative, but I hope that Government encouragement is not flagging. Terrorism and tourism go ill together, but both these phenomena are now, alas, almost universal. One may be as safe in the Ulster Museum as in the Tower of London and find as much tranquillity in the glens of Antrim, the Mourne Mountains or round the lakes of Fermanagh as anywhere in England, Wales or Scotland. For example, what part is being played by the Ulster Office in making known the beauties of the Province? Will the Minister tell us something about that? It seems that the Ulster Office is there, but we do not hear very much about its activities.
The estimate for capital expenditure at Aldergrove Airport is to go up by almost £300,000. That reminds me of a recent criticism of the passenger handling facilities by the local manager of British Airways, who said that £10 million was necessary to bring them up to scratch. Does the Minister agree?
More than £1 million is provided for bus operators. The problems of those who carry passengers and freight in times of guerrilla war are immense. Trains can be, and have been, held up for days by terrorist bombs on the line. Buses are often hijacked and destroyed, or seriously damaged. I understand that, out of 300 city buses, some 100 have been destroyed. All the rest have been damaged at least twice. About 10 members of the staff have been killed. One wonders how the bus operators carry on, but they do, and they deserve our admiration and support.
Ulster trade union leaders and the trade union rank and file members have given a responsible lead in the present troubles. I do not, therefore, cavil at the raising of the grant to the Northern Ireland Committee of the Irish Council of Trade Unions from £12,000 to £20,000, but I think the House might like to know whether this higher grant is intended for a specific purpose.
The sum of £5 million is allotted for selective employment premiums. The rate of the regional employment premium was doubled in the summer Budget, and this £5 million represents the additional amount for the rest of the year for Northern Ireland. What discretion is given to the Northern Ireland Department of Commerce in the distribution of these sums to different parts of the Province?
An increase of £3 million in supplementary benefits recalls an oral Answer which the hon. Gentleman gave on 28th November 1974, when he said that 5,247 tenants were still on rent strike. Will the hon. Gentleman tell us whether the deductions are still being made from benefits claimed by such persons in respect of their debts?
Turning to the Draft Financial Provisions (Northern Ireland) Order 1974, according to Article 4 the limit of loans in Northern Ireland goes up from £450 million to £600 million. I should like to know the reason for this steep increase in the borrowing estimates. The Minister may wish to reply to the criticisms which have been heard from some quarters in Northern Ireland of the extent of Government borrowing in recent years. Is it true that some of the nationalised bodies, such as the electricity board, are drawing very heavily on Government loans?
Schedule 1 to the order raises to £40 million the limits on Government payments for industrial development and for the attraction of investment to Northern Ireland. The Minister of State recently announced the trade figures for Northern Ireland for the year 1973. He paid tribute to the export achievements of Northern Ireland industry. I think we should all like to do that. In real terms there was an increase of 18 per cent. in sales outside the Province and the value of total trade increased by 34 per cent. This is remarkably encouraging in these times of disorder. All hon. Members salute the workers of Ulster in all sectors and at all levels of the Northern Ireland economy.

10.54 p.m.

Mr. Wm. Ross: Since the Northern Ireland situation was not adequately explained on the last occasion when agriculture was debated in the House, I intend to devote my remarks this evening to Class V of the Draft Appropriation (No. 2) (Northern Ireland) Order 1974.
First, I should like to draw attention to Class V 3. I understand that this grant relates to the brucellosis eradication scheme, and the decrease in appropriation in aid is an indication of the drop in the value of the carcases of cattle slaughtered under the scheme. It is a matter of regret that due to the present beef situation there was a decrease of £92,000 in the value of the cattle slaughtered under the scheme.
I should like to couple with that item 6, providing a sum of £1,500,000 for increased expenditure in respect of the beef support scheme in Northern Ireland, and specifically the scheme which was introduced in lieu of the extra £10 per head in the calf subsidy. That scheme paid out £1·76 per cwt. It lasted for only a very short time. Eventually the extra £10 calf subsidy had to be introduced in any case. I should not like hon. Members to think that I object to the farmers of Northern Ireland receiving an extra £1,500,000, but I ask the Minister whether this amount was actually paid out under the scheme, or whether some lesser sum was actually paid.
Arising directly from that, we have recently had a new régime introduced for beef. I draw attention to the fact that in the first week of the scheme, the Northern


Ireland average price was £11·58 per cwt, whereas the price in Great Britain was £15·97 and the United Kingdom average was £15·52. If we add to that the headage payment of £2·27 per cwt. and the Northern Ireland variable premium of 80½p, we arrive at £14·65½, which is far below the target price of £18 laid down for that week.
On the second week, unfortunately the market price in Northern Ireland dropped to £11·36. The price in Great Britain was £16·27, and the United Kingdom average was £15·47. When to that is added the headage payment of £2·27 and the variable premium of £1·30, we discover that the average price for Northern Ireland was £14·83.
In the first week, we were £3·35 below the target price. In the second, we were £3·62 below it. I need not say how serious this is for the beef farmer in Northern Ireland, especially considering that the beef farmer on this side of the Irish Sea grossed more than £18 per cwt. in both weeks.
I suggest to the Minister that Northern Ireland needs to be treated on a separate basis from the rest of the United Kingdom if we are to get the result out of the new beef regime at which the scheme is aiming. I know that we have the additional payment of 70p per cwt. which has been paid in full in the first, two weeks, but when we are so far below the target price, 70p does not go very far. It will need to be raised by a considerable amount.
One problem which confronts us is the practical difficulty of exporting our cattle from Northern Ireland to Great Britain. We are grossly overstocked at present, and we have had very serious shipping problems. One of the cattle boats, which plies out of Londonderry, was broken down for some weeks. It has recently returned and is now doing two runs a week to Glasgow carrying about 440 head on each run. The second boat plies between Belfast and Birkenhead, doing three trips a week and carrying about 460 head a trip.
In addition, we have recently introduced for an experimental period a roll-on roll-off means of transport in containers. But here there are grave difficulties because I understand that in the long run a new container will need to be designed, and I

was wondering whether there was any possibility of aid being given towards such a design.
In addition, is there any possibility of allowing cattle to be taken on this roll-on roll-off not to Birkenhead or Liverpool but to Stranraer, which means a considerably shorter crossing? I am aware of the difficulties with lairage and the 10-hour waiting period which the veterinary people demand, but, since the cattle would not have to be off-loaded, why should not they be transported another 20 or 30 miles before going into lairage for their rest period?
Finally, on beef, I wish to draw attention to the problems of the suckling herd, which is the primary source of beef cattle. The farmer engaged in suckling seems to have been forgotten in all this melee about beef. If he goes out of business, there will be even more serious problems for the beef producer. If there are no calves, obviously there cannot be beef on our tables.
I should like to draw attention to the prices paid in the principal suckler markets over the last three years. In September and October, 1972, the average prices were respectively £81·75 and £77·98. In September and October, 1973, they were respectively £90·25 and £80·92. In the first four weeks of the markets this year, the average price was £35·16, and even with the extra £10 per head calf subsidy, it is still only little more than half last year's average.
I need not say how serious this is for the suckling farmer, for he is normally a small farmer. There are a few large herds, but with the increase in stock there are increased problems, although basically these are small farmers living in the foothills who cannot keep their cattle over winter, who find it difficult to sell and who have sold this year at disastrous prices. I hope to hear tonight that some aid will be extended to that section of the farming community.
Class V2 shows an increase in appropriations in aid of £77,500, which I understand arises from the increases in the value of sales and services, mainly from the colleges run by the Department of Agriculture in Northern Ireland. What extra money and extra courses will be available to the budding farmers in Northern Ireland? I know that much has been done, but a great deal more remains


to be done because the day of farming as a way of life is over. Farming today is a harsh business and it has to survive in open competition with the world. If farmers are to survive, especially with the remoteness from the market which exists in Northern Ireland, it is essential that they be well trained and capable of carrying out the farming task for the benefit of this nation.
Class V4 contains the sum of £23,400, which I understand is the United Kingdom share of the deficit of the Foyle Fisheries Commission for the year which ended on 30th September. The Foyle Fisheries Commission is rather a mule in Northern Ireland, because it straddles the border. From its past history, in fact, one should say that it is a jennet rather than a mule. It faces serious problems. It is not the most popular body among the angling or the commercial netting community. I know, having fished with a rod and netted with a commercial net in my time. No one seems to like it. That might be an advantage in some circumstances, but it is certainly not an advantage for the Foyle Fisheries Commission.
The Foyle system has been described as the richest salmon fishery in Europe. It produces between 60,000 and 100,000 salmon per annum—sometimes more. That has to be set against the total production of the rest of Northern Ireland of about 30,000 salmon a year. These salmon are worth between £250,000 and £300,000 a year to the Northern Ireland economy. This considerable sum is a great help to many of those engaged in the salmon industry.
The system faces the most serious problems of water abstraction for industry, especially from the River Faughan, which I fear will be extended to other rivers. It also faces problems of water abstraction for human beings, which has had serious consequences for the tributaries of other rivers. It has had the problem of salmon disease over the past six or seven years which has taken the gravest toll of fish life in the entire system and has cut down the number of salmon running into the rivers. In addition, there is salmon netting on the high seas. I trust that that is a matter that will be considered constantly whenever the industry is being considered.
I draw to the attention of the House the problem of boats which are left on the beaches and river banks in the Foyle system. At the moment there is no legislation governing the safety of the boats. They are left unlocked. This year three children aged 10 or 11 years lost their lives just outside Londonderry. They took out a boat, fell out of it and drowned. It was a most distressing case. I visited the parents. The lost children were two brothers and a friend who lived nearby. Surely some regulations could be introduced by the commission or by another responsible body to ensure that boats are not left lying around. They are a temptation not only to poachers but to adventurous children. Such children will always get into trouble even when it is thought by adults that it is impossible for them to do so.
I do not want to try to run away from the fact that in salmon fishing and game fishing in Northern Ireland there is a tremendous social facet which cannot be ignored. Salmon fishing in the Province is cheap. A salmon licence for the Foyle system costs £3 a year. There are many miles of salmon fishing open to the general public. I hope that that policy will be preserved in future.
I draw the Minister's attention to the activities of the Department of Agriculture in Northern Ireland. It has taken over some stretches of river and immediately raised the cost of licences far beyond the pockets of the local population. That is deeply resented. I trust that that will be taken into account in future activities within the scheme.
The Foyle system would appear to have had a deficit this past year of £46,800. I understand that there is an accumulating deficit apart from that. That is remarkable because the Northern Ireland Fisheries Conservation Board manages to break even each year. It covers a larger area but it does not have the same number of salmon. It does not have the same sources of income although its total income is about £100,000. The Foyle Fisheries income in 1972 was £37,000 yet it ended up in debt. Why should this be so?
In July 1973 two Canadian experts carried out a survey on the fishing


stocks in the Foyle system. They presented a report but it has not been published. I think I speak for the anglers and netsmen in the Foyle area when I say that I want to see the report published quickly. I should like to see full public discussion and any difficulties that exist to be acted upon by the commission and the Department.
Finally, I draw the attention of the House to Class V, No. 5, which deals with forestry. I understand that there is a constant downward trend in the amount of money that is being spent on private forestry in Northern Ireland. The owners of private woodlands were provided with a grant of £26,000 by the Department for the year ending March 1971. The next year they received £20,000. In 1973 the figure was £19,000 and for the year ending 1974 it was £17,000. Apparently in the figures before us there is a decrease of £5,000 in the grant available to private forestry.
The amount of private afforestation is a fair barometer of the income and prosperity of farming. When farmers are making money, they tend to plant trees. When they are not making money or when profits are small, they stop planting trees. Tree planting is a long-term investment. It is an investment for other generations. When the farmer who planted the trees is dead, someone else will live to enjoy the benefits. Tree planting is a process that should be encouraged by every means. The country has a great need for trees, and perhaps this aspect of farming has not been treated as well as it should have been treated.
Since the planting of trees is a long-term prospect and not a very profitable exercise to the person who plants the timber, I wonder whether the Minister would perhaps convey to his right hon. Friend the Chancellor of the Exchequer a few thoughts about capital transfer tax in regard to private woodlands. It is a serious matter for private woodland owners that capital transfer tax should apply to them, since tree planting is something from which they get no real benefit in their lifetime but which will benefit the country as a whole. It is in every sense of the phrase a growing investment.
I understand that in terms of profitability, the value of products sold from forestry has increased by a sum of

£165,000 this year. Afforestation in Northern Ireland is proceeding at a rate of 5,000 acres per annum. I suppose that that figure cannot be stepped up to any great extent, but I should like to see more encouragement given to private afforestation. There are many small plots of land which have no use for agriculture but which could be used to grow excellent timber. It is certainly better to grow timber than to grow rush or scrub, which are of no benefit to man or beast.
There is much more I could say about the difficulties of agriculture at present, but I think I have raised a few questions which require an answer. The farmers of Northern Ireland would like to have some idea of what will be done to improve the lot of the beef farmers. They would like to know what is to happen in future about their transport problems. They would also like to know whether there is any possibility of a relaxation in veterinary requirements in terms of lairage for transport across the sea and whether there is a possibility of getting cattle into Stranraer rather than Birken-head or Liverpool in a roll-on roll-off system of transport.

11.14 p.m.

Mr. James Kilfedder: I wish to refer to a few points and I hope that the Minister will be able to help those in Northern Ireland who are affected by the problems which I shall outline.
I agree with the hon. Member for Londonderry (Mr. Ross) about the present situation facing agriculture. I wish to emphasise the plight that besets farmers —and certainly Lord Donaldson recognised their plight—and to suggest that something needs to be done because beef producers have suffered a great deal in the past year. It is no use their relying solely on the benefits which the Minister for Agriculture brought back from the Common Market. If farmers are to pull through a tough winter, they will need a bigger subsidy.
In my constituency of North Down I am greatly concerned over the subject of housing, and indeed there is a desperate shortage of houses and accommodation generally throughout Northern Ireland.
The only way to release skilled building labour and financial resources for a crash building programme is to curtail


the capital investment programme in other directions and to prevent the building of office blocks, which profit few except the speculators. This is essential. I have been demanding this for some time, though my demands have fallen on deaf ears when I have addressed them to the Government in the past.
North Down is a growth area. It has long been a reception area for people on the Belfast emergency and redevelopment lists. No one objects to people coming from Belfast into North Down. New people are welcomed into my constituency. Unfortunately, however, the local people are pushed to the wall. They get no resettlement grant to take up residence in their own area, whereas the grants act as an incentive to people from outside the area.
Persons on the emergency and redevelopment lists in Belfast are not awarded points. They do not need them because they receive priority over local people in North Down. There are houses lying empty in Craigavon. It is essential that people should be enticed to go there, because North Down cannot cope with the great number of people who are coming into what is obviously a very attractive area. I hope to deal later with the subject of tourism.
There are thousands of people in North Down who desperately need rehousing, particularly young married couples and the elderly. There are few houses for them. They are largely dependent upon relets, which in many areas are few and far between. In North Down very few houses have been built recently. I do not intend to allocate the blame for this state of affairs. I am not interested in laying blame. I want to see the houses built.
The Under-Secretary most kindly came to Bangor about six months ago to see the Bloomfield Road estate there. We appreciated his visit. It showed his concern for the people of that area. However, I recently received an incredible reply to a parliamentary Question. I think that it came from the Under-Secretary. It alleged that there were only 1,505 applicants at present on the waiting lists for houses in the North Down area. But I know that at present there are nearly 1,200 applicants in the New-townards district alone. I do not know

who provided the Under-Secretary with that reply and how he was able to reduce the number of people waiting for houses in North Down to 1,505. In the Bangor area—without turning attention to the 'Ards, Hillsborough and the Saintfield area—where people are also waiting for houses—at least another few thousand people are on the waiting lists.
Even taking the Government's obviously incorrect estimate of 1,505 applicants, it will be 1980 before they are all housed, for the public sector building programme will not exceed 300 houses a year until 1978. That is a paltry, miserable figure. I do not believe that the Minister can accept it as being otherwise. It is a shame. It bears no relation to the grave problem. It is a very human problem. I cannot think of anything more important—apart from the ending of the IRA terrorist campaign—than the people having decent houses in which to live.
In the course of the year I have received close on a thousand letters from people with housing problems, some of them with no adequate place in which to live. I have seen some of these houses. They have damp walls, leaking roofs, rotting floorboards, no inside lavatory, no hot water and no bathroom. Very often I noticed that the chimneys are not operating properly so that people, particularly the elderly, cannot keep a fire going.
The relative affluence of the North Down area has tended to disguise the fearsome conditions in which many people are living. The Government must build forthwith sufficient houses in North Down, because this is an emergency. They are needed by the local people as well as by outsiders. An essential short-term measure is the construction of one-bedroom flats.
I emphasise that point because there are so many young married couples who are told that they cannot have the accommodation because they do not have the points, even though they are living in crowded conditions at home. They do not have the points because they do not have the children. It virtually means that these couples would have to live in sin and have a number of children in order to acquire the points which would enable them to be given the accommodation when married. In this day and age


young married couples should not have to face married life in the home of the husband or wife's parents, because in such conditions, even with the best will in the world, there is bound to be tension, and perhaps rows.
I heard of a case only a few days ago where nine people are living in a three-bedroom house, and one of those bedrooms is a box room. The father is ill. He has a sister living there who is also ill. A brother living there is married with a child. All the furniture is in the bedrooms and these people have virtually to climb over it to get into bed. I know that the Minister will have sympathy in this case, and I mean that sincerely because I think he is sympathetic to such cases. But sympathy is not enough. I also want Government action, and that means that money must be provided and the workers found to erect the flats. This will mean cutting through the red tape of planning procedures.

Mr. McCusker: Is my hon. Friend aware that lack of money is not the obstacle? The obstacle is the sheer inability of the housing executive to build houses. The Government can pour all the money they like into the housing executive, but unless the executive starts to improve we shall not get more houses.

Mr. Kilfedder: I agree with my hon. Friend, but I must stress that in Northern Ireland there is a shortage of building workers and the reason for the shortage is that much of the available labour is involved in building office blocks. I am not certain who will occupy these offices. Some of them are lying empty. Even if they are occupied they will benefit only a few people—and some of them will be speculators. The money and labour involved in this activity should be diverted to a house-building programme.
My hon. Friend mentioned the housing executive. I do not want to lay blame on anyone. The executive is too large, and, as in all bureaucracies, the buck gets passed from one man to the next. In North Down local officials try to be as helpful as possible but they are restricted. Applicants must have sufficient points before they can be provided with accommodation. I hope that the Minister will announce tonight that he will see to it personally that there will be a crash build-

ing programme in Northern Ireland—and "crash" is the right word.
When people are moved into new housing estates, they are often far removed from their relatives and from shops. I hope that the Government will introduce transport fare concessions for old-age pensioners and the chronically ill. There is a desperate need for such concessions. People who are no longer living in the centres of towns and who no longer have their relatives around them have to travel considerable distances to see their relatives. It is expensive to do so, and the fares will increase in the coming months.
I turn to the question of hospitals in North Down. The Minister should persuade the Secretary of State to visit the Newtownards Hospital, where he will find a workhouse built in about 1860 or 1870 still in use as part of that hospital. That is an indictment of all those responsible for the health services in Northern Ireland. The doctors and nurses do their best in the circumstances, but we need a proper hospital service in North Down. Bangor Hospital has no casualty department. There is a lack of medical staff coverage, and doctors must be enticed there.
The population of Bangor is, I think, about 45,000, and it is rising rapidly. Yet there has been no casualty service in Bangor Hospital since 1972. The only service available is that provided at the Ards Hospital and the Ulster Hospital at Dundonald. If someone has a heart attack in Bangor, or is knocked down by a car or shot by a terrorist, he cannot be treated in Bangor Hospital. Ambulances are few and far between, so he may have to be taken by taxi to Newtownards. Between 11 p.m. and 9 a.m. there is no X-ray service available at Newtonards, without certain lengthy procedures being adopted, and someone with a serious injury would have to be taken on to the Ulster Hospital.
That is not good enough for an area the size of Bangor and Newtownards. I know that the matter does not come under the Minister's Department, but something should be done to make it financially rewarding for doctors to take up posts in Bangor Hospital, which is a fully equipped hospital. What is more, something should be done to provide


enough doctors, so that they do not have to work longer hours than their counterparts have to work in the Belfast hospitals. I hope that we shall have some satisfaction on that.
We need a new hospital wing at New-townards. I go as far as to say that we need a new hospital in the Lower Ards, because the Ulster Hospital at Dundonald deals largely with the East Belfast area and it does not have the necessary accommodation. As I understand it, there are not enough geriatric beds in the Ulster Hospital for all the people who need attention. Will the Minister look into that, too?
I come now to a matter which may look insignificant but which is of great importance to the people of Donaghadee, that is, the drinking water supply. For years I have complained about the water in Donaghadee. Donaghadee is the only part of the Ards peninsula which suffers from water which has an obnoxious smell and an unpleasant taste. The water discolours clothes when they are washed in it, and only last week I was informed that the father of a young baby was told at the clinic at Newtownards that on no account was the child to be given any of the Donaghadee drinking water.
It is remarkable—almost like a Wild West scene—to go into Donaghadee and see the water wagon bringing water round to the residents, or to see them go with their plastic containers to a tap just on the outskirts of Donaghadee to get decent water.
This has gone on too long. I see that the Minister agrees with me, and I am glad of that. Why should these people suffer? I live only a short distance outside Donaghadee, and the water I have there is perfectly all right, or —I had better not go too far—it is reasonably good. I want to know why the Ards mains water cannot be piped into Donaghadee so that the people there need not have to use the water from the local reservoir. I understand that in the summer there is a growth of algae in the reservoir and then chlorine or some such substance is put in the water in an effort to make it drinkable.
I want the Minister to make a personal visit to Donaghadee, as a Christmas treat, and to taste the water. Perhaps

he will then be able to tell his right hon. Friend the Secretary of State for Trade that it ought to be bottled and exported as something peculiarly Irish. But we do not want it in Donghadee.
That brings me to tourism. Although we are living in Northern Ireland in virtual war conditions, it is right that we should think of the future. It is not just a question of the future, either. We are still able to attract people to Bangor, a most delightful resort, as the Minister is now aware.
Will the Minister do something about the pier at Bangor? It is in a dangerous state, and it has been so for a long time. In the past, Government officials or Ministers have come to view it. They look at it with amazement, they express their condolences to the local residents, they go back to Stormont, and that is the last we hear of them. Will the Minister assure me—if he gives this assurance I shall be satisfied—that he will go and look at it himself and see what can be done to rectify it?
Perhaps at the same time the Minister might turn his attention to the other tourist attractions in North Down and see what can be done to restock the rivers in North Down, because many people come there for the fishing. In addition, the beaches need to be cleaned. We have Enterprise Ulster allegedly employing the unemployed, but the beaches are still dirty with old mattresses, tin cans and empty beer bottles littered along the shore. They should not be there.
My last point concerns oil and mineral rights off the shores of Northern Ireland. Can the Minister tell us in his reply whether any exploration is planned off North Down, Antrim or Londonderry for oil? I am told that there are rich oil deposits, particularly off Antrim. I think it is essential that money should be spent on this, because money is being spent on searching for oil in what is known as the Celtic Sea and some attention should be paid to the Ulster Sea.
Will the Minister also deal with the allegation by the Irish Republic that it has territorial rights to the sea around Northern Ireland and to the mineral rights and oil rights there? This is a fantasy. None the less, can the Minister give a rebuttal to the Irish Republic, so


that we can turn our backs on them and hope that from what I believe to be the rich deposits off the shores of Northern Ireland we can finance a prosperous Northern Ireland for the years to come?

11.37 p.m.

Mr. Gerard Fitt: Prior to the contribution by the hon. Member for Down, North (Mr. Kilfedder) I had been of the mistaken impression that my constituency was the most neglected in Northern Ireland, but at least I am now aware that we have hospitals and water in West Belfast. I certainly reinforce seriously all the complaints and the objections which have been raised by the hon. Member concerning the serious problem of housing throughout Northern Ireland.
In North Down there is certainly a serious problem, but it is nothing as compared with West Belfast and County Fermanagh. I think that the whole population in Northern Ireland were astounded when they read recently the report by the Northern Ireland Housing Executive and saw the immensity of the problem which we have in Northern Ireland.
During the five short months of existence of the Executive this was something on which every member of that body concentrated his mind. We recognised that there was a serious housing problem, and yet we were not fully aware just how grave it was. The inquiry had only then been commissioned and we did not have the findings of the report, but we were well aware of the very bad housing problem.
I think I should say this—[Interruption.] Hanging is important, and the hon. Member for Fermanagh and South Tyrone (Mr. Maguire) was here yesterday for that debate, or so I understand from the voting record. I would think that housing in his constituency is just as important. I would have hoped that he would be here tonight to avail himself of the opportunity of catching the eye of the Chair and so putting before the House the problems which affect his constituency.
In the Northern Ireland context many of my political colleagues represent constituencies there in the Northern Ireland Assembly, and they do not now have a voice in the Assembly as such. I

would hope that those who ware elected to represent constituencies would at least find themselves able to come to this House and raise these matters.
Can the Minister tell me why there has been a hold up in the building programme in Belfast West? I recognise that the area has suffered from terrorist activity, but I hope that the Government have not decided to wait until there is an end to such activity before they build houses there. There are many acres of land, not particularly in Republican areas, which are readily available. There has been reference to the needs of commerce. Here, again, there are many sites in Belfast West's industrial area where commercial development could take place. Business could be directed to the area. There is land for the homeless and land for shops and industry.
While we have a housing problem we also have an unemployment problem. I recognise that the construction industry employs skilled labour. Surely a crash programme could be mounted to train people in the necessary skills. It would not take so many years. It would at least take people from the office blocks and the dole queues, which is important. I have paid tribute over the years to the achievements of the Northern Ireland training services. I feel sure that there are training places available for plumbers and bricklayers and the other ancillary trades so necessary if we are to speed up the housing programme.
It is the duty of this House to pay the same attention to these problems as was paid to them by the Northern Ireland Assembly. This is the only place where the voice of the people of Northern Ireland can now be heard. I support what has been said about the way in which these orders are being dealt with tonight. Northern Ireland's problems are of such importance that they should be of concern not only to Members from Northern Ireland but to all hon. Members. I plead with the Minister to see the Northern Ireland housing problem for the tragedy that it is and to exert every effort to make certain that active steps are taken in such areas as Belfast West and Fermanagh and South Tyrone to improve the situation.
Some have said that there seem to be houses lying empty in Armagh. It is not


the duty of the Government to build houses in areas where tenants cannot be obtained. It is up to the Government to build houses where the people are, not to get the people to shift themselves all over Northern Ireland to suit the whims of some civil servants who have drawn up some grandiose plan.
For historical reasons we are an insular society. People wish to live in the area in which they were born, where they have family connections, and priority should be given to those people. The Minister said that he had taken into account the findings of the report made by the Northern Ireland Housing Executive, but he will have to do much more than take it into account. He will have to show what urgent steps he is prepared to take to deal with the problem.

11.45 p.m.

Mr. Robert J. Bradford: The announcement of the increase in the sum to be issued from the Consolidated Fund will be received very favourably by the people of Northern Ireland. The statistics issued by the Department of Trade will also be received favourably, in that 4,500 people have been given jobs in the first three-quarters of this year, representing an increase of 600 jobs compared with 1973.
The unemployment figure for Northern Ireland is 6.1 per cent., which is very high. I draw to the attention of the House two industries which are facing crises. If those crises are not dealt with, the unemployment figure will rise substantially.
The first is the textile industry, particularly the shirt industry. Northern Ireland has about one-third of the shirt industry of the United Kingdom. It also has a considerable number of clothing and finishing factories. The shirt industry is under a grave threat. About 50 per cent. of all the shirts bought in the United Kingdom are foreign, and that represents a 50 per cent. increase in four years. We have permitted an important industry which is largely sited in Northern Ireland to suffer drastically from foreign imports.
Some of those foreign imports can be produced for one-third the cost of producing them in Northern Ireland. For example, imported shirts, which are on

sale for about £2·60, are imported for a little over 60p. They are produced for 60p. The cost of producing a comparable shirt in Northern Ireland is £1·40—that is, without profit. In Londonderry, Belfast and Antrim the shirt industry is gravely threatened and, unfortunately, many factories face closure. This is a grave problem.
Consumer expenditure on clothing is rising by 6 per cent. a year. Yet British manufacturers had a deficit of £154 million in 1973. I have mentioned that some of these cheap imports are being sold at prices comparable to those of shirts made in Northern Ireland. That means that someone somewhere is making a killing, as it is known in the trade. Someone is making an exorbitant profit, and I would like the attention of the Secretary of State for Prices and Consumer Protection drawn to the situation. We are importing shirts at 60p each and selling them at between £2 and £3. This is posing a death threat to the Northern Ireland shirt industry.

Mr. Nicholas Winterton: Is my hon. Friend aware that the problem facing the shirt industry in Northern Ireland is also facing the British manufacturing and making-up industry in the rest of the United Kingdom, including my constituency in Cheshire and also Lancashire? Will he join other hon. Members on both sides of the House in representations to the Government to try to get a curb put on the import of cheap goods, particularly from the Far East?

Mr. Bradford: I agree with my hon. Friend. I understand that about 60,000 people in the United Kingdom are involved in the shirt and clothing industries. The jobs of a considerable number of them are threatened by these uncontrolled imports.
Whilst imports have reached 50 per cent. of the total market, the Government have not recognised that we have a dumping problem on our hands. I do not know what constitutes a dumping problem if the holding of 50 per cent. and more of the total market by cheap imports is not dumping. I know that all kinds of intricate procedures have to be gone through to prove that there is a dumping problem, but by the time we prove by those procedures that we have such a problem in Northern Ireland and the


United Kingdom as a whole, many concerns will have gone out of business. An added difficulty for Northern Ireland is that if the shirt industry there fails completely, there is no alternative employment for the people thrown out of work. We shall have no means of absorbing them back into employment.
The second industry in Northern Ireland under grave threat is the building industry. A great deal of attention has been paid to the public sector, and I want to concentrate my remarks on the private sector. The Federation of Building and Civil Engineering Contractors has stressed the immediate need. It rightly points out that there are three basic problems.
First, sufficient finance has not been available for the purchase of homes in the private sector. Secondly, the level of interest rates involved in house purchase is very high. Thirdly, because of the political unrest there has been a great fall in the number of homes built and sold.
Between 1969 and 1973 4,000 houses per year were completed in the private sector. In 1974, well under 2,000 houses were produced in the seven best building months of the year—that is, excluding what the building trade calls the winter months. This is a serious situation. Many young people who cannot acquire public sector houses, because of the points system referred to by my hon. Friend the Member for Down, North (Mr. Kilfedder), have no alternative but to try to purchase houses. Yet such houses are not available for the three reasons that I have mentioned.
We face the great difficulty of small subsidies and the high cost of repairs in the public sector. If private housing subsidies were raised from the present £385 to a level which would encourage young people to buy, the building industry in turn would reap the great benefit of a boost in demand. If more loans were made available and repayments were made easier, the result would be an improvement in demand which would also help to save the building industry. If more people were encouraged to own their own property, there would be less political tension in some areas, because they would have a vested interest in checking unrest in those areas.
I shall not take up any more time. I simply reiterate the needs of the two industries which I have mentioned which are facing a great crisis at this time.

11.57 p.m.

Mr. Concannon: I think that we should rechristen the debate the Consolidated Fund debate. We have done a better job that we did in July when I presented the main Estimates.
These are Supplementary Estimates. Hon. Gentlemen will recognise that a great deal of what they have said relates to future policy which will go in the estimates for another year. Much of what has been said does not come within my responsibility. However, I assure hon. Gentlemen that any points with which I cannot deal tonight will be answered in writing by the various Departments concerned.
There has been a great deal of talk about housing. I should be only too pleased to debate the housing situation in Northern Ireland, because I agree with almost everything that has been said about it.
After a late sitting here last night. I went back to Belfast this morning. I chaired a two-hour meeting of the Construction Advisory Council, which takes in practically all elements in the building industry—trade unions, architects, and so on—with housing very much in mind. However, some of the matters raised by hon. Gentlemen would not have universal favour with the council. After that meeting I met a deputation from the Roden Street area of West Belfast—I have met similar deputations from other areas at other times—on the subject of housing.
No one can visit Northern Ireland without being struck by the housing situation there. I shall take to heart some of the points made during this debate. It is not an easy situation. The point was made that more money should be provided and more workers found. There is a limited pool in Northern Ireland from which to find these workers. There is a continual effort to draw on this pool of labour. The fire service, the police and the Army continually try to draw on it. However, I am fully aware of the housing situation. One has only to be in my Department for one day, and to see the deputations and the wretched housing conditions of the people living in Northern


Ireland, to feel ashamed of the council's housing stock.
My job is not to make excuses. My job is to find a way to deal with the housing problems in Northern Ireland and to make sure that the people are rehoused in the sort of accommodation in which they can reasonably be expected to live.
I find there is one difficulty concerning the Roden Street area. There used to be 1,000 houses in that area, but we cannot now build to the same density. Now we can build only 370 houses, and with the best will in the world some people will have to move. This is one of the problems. Although I think that people have a perfect right to state their preference and to live in the area they prefer, the difficulty lies in trying to fit everybody in. With my background, I must obviously be sympathetic to people living in such conditions.
I assure hon. Members that I did not volunteer to discuss this matter so late at night. Consultations are proceeding between the usual channels to find better ways of dealing with problems such as these. I should have been in serious trouble with the Opposition if I had not brought these orders before the House, but it had to be done by a certain time and this was the only time offered to me. I had to accept that offer. I should have been in more serious trouble had money not been made available by means of these Supplementary Estimates.
The hon. Member for Epping Forest (Mr. Biggs Davison) raised the question of the travelling expenses noted under Class I on page 3 of the Appropriation Order. There was an underestimate here due to a decision of the Assembly, before that body went on its way. The original Estimates were based on Members' travel from their constituencies to Stormont. The Assembly decided that travelling expenses could be claimed in respect of travel within the constituencies. This made a difference to the Estimates.
The hon. Gentleman also questioned me about the rent strikers and supplementary benefits. Once a person draws supplementary benefits, he virtually comes off the rent strike because the money is deducted from his supplementary benefits.
The hon. Gentleman also asked about regional employment premium. Regional

employment premiums are payable on the same basis as those paid in the development areas in the rest of the United Kingdom. The rates are uniform throughout Northern Ireland and the premiums are payable by the Department of Manpower Services.
Provision was made in the Estimates for membership subscriptions to the Commonwealth Parliamentary Association, for secretarial and other expenses in connection with membership, and for expenses relating to annual and regional conferences. The total amount set aside for those purposes was £4,000.
I was asked about the rôle of the Ulster Office. In recent years, it has been very active throughout Great Britain in publicising information on the industrial and economic side of life in the Province and, to some extent, it has been successful. British customers have been reassured that their orders will be fulfilled on time—

It being one and a half hours after the commencement of Proceedings on the Motion, Mr. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted Business).

Question put and agreed to.

Resolved,
That the Appropriation (No. 2) (Northern Ireland) Order 1974, a draft of which was laid before this House on 21st November, be approved.

Resolved,
That the Financial Provisions (Northern Ireland) Order 1974, a draft of which was laid before this House on 21st November, be approved.—[Mr. Concannon.]

Orders of the Day — NORTHERN IRELAND (YOUTH EMPLOYMENT SERVICE)

12.5 a.m.

The Under-Secretary of State for Northern Ireland (Mr. John Concannon): I beg to move,
That the Youth Employment Service (Northern Ireland) Order 1974, a draft of which was laid before this House on 5th December, be approved.
The main effect of the order will be to provide for the dissolution of the Youth Employment Service Board for Northern Ireland, the transfer of its staff to the Department of Manpower Services and the establishment of a Youth Careers


Guidance Committee. Its underlying purpose is to achieve improvements in the facilities for career guidance and placement in employment that are available to young people in Northern Ireland. I am sure that hon. Members will agree that this is a most important objective.
The order follows recommendations made by a working party consisting of representatives of the Northern Ireland Departments of Education and Manpower Services, which was established to review arrangements for the services at present undertaken by the Northern Ireland Youth Employment Service and related services. The working party completed its report in March of this year. My right hon. Friend accepted the recommendations which it made, after a period of consultation with interested persons and bodies.
To date, the Youth Employment Service in Northern Ireland has been provided, as a service separate from the General Employment Services, under the Youth Employment Service Act (Northern Ireland) 1961. Responsibility for the service has been vested in a board, with members representing both educational and industrial interests, which was responsible to the Department of Education. The board has had the duty of providing facilities and services to help young people under the age of 18, and those over that age who were still attending school, to find suitable employment, and to help employers to recruit suitable staff from amongst these young people. The board worked through a network of offices throughout the Province from which professional youth employment officers worked in close cooperation with the schools in their area and with the advice of local Youth Employment Committees. Certain support services were provided by the board's headquarters in Belfast.
The development of the Youth Employment Service under the arrangements which I have described was hindered by certain operational difficulties and other inhibiting factors. The working party to which I have referred identified a need for the greater development of careers guidance services within schools themselves. It proposed that schools should have teachers with appropriate specialist training who would hold specific

responsibility for the provision of careers education and information and personal guidance and who would be supported by outside expertise. The working party found also that in the absence of such facilities Youth Employment Service officers had been obliged to spend a disproportionate amount of their time on careers guidance as opposed to placement services. In consequence, those officers had, as a rule, insufficient time to devote to contacts with industry, which in turn prevented their obtaining sufficiently detailed knowledge of national and local employment opportunities.
Moreover, the board, as a separate statutory body, was divorced from the main stream of expertise in, and knowledge of, the employment field, this being the responsibility of the Department of Manpower Services with which it had no direct link. In addition, the statutory age limit of 18 years had caused an unnatural break in the continuity of guidance provided for young persons and compounded the difficulty of securing effective follow-up and validation of placements in employment. Further, the existence of the service as a small separate body meant that the amount of training that could be provided for staff was limited, and prospects for promotion were unduly restricted. These factors had contributed to staffing difficulties which meant a lack of essential continuity in the services given to many young people, and the size of the service had led to an inability to develop adequate research and other facilities.
What I have said in no way detracts from the value of the service rendered by the Youth Employment Service Board. I should like to pay tribute to the board and its staff. It has faced many difficulties—not least of which has been the fact that in recent years there have been a number of terrorist bomb attacks on its premises. Despite these difficulties it provided great assistance to young people and succeeded in placing many thousands of them in employment. However, the Youth Employment Service as hitherto constituted was not in a position to provide all the facilities that could be made available to young people through the Department of Manpower Services. The working party recommended—

Mr. James Kilfedder: I am interested in what the Minister


says, although I do not accept it, of course. I am not in favour of the Common Market, but what he is proposing is contrary to what has been advocated inside the EEC. Why should Northern Ireland be different from the world trend?

Mr. Concannon: There are plenty of precedents for legislation which is peculiar to Northern Ireland. This started with complaints and suggestions in Northern Ireland which were taken up after a great deal of consultation. The hon. Member had a copy of the report in March this year. For him to come along now—

Mr. Kilfedder: This is the only debate we have.

Mr. Concannon: I am sure that the hon. Member will remember where he was in March. A copy of the report was supplied to him and there have been many opportunities for consultation. We have probably consulted Northern Ireland to death on this issue. We can debate the matter afterwards, since he is probably looking at me in disbelief. I do not know what happened—perhaps he used the fast filing system in the Tea Room.
As I was saying, the working party recommended and the Government accepted—after, as I have said, due consultation—that the board should be stood down and that its staff should become part of an all-age guidance and placement unit which is being established within the Department. It proposed also that a Youth Careers Guidance Committee should be established with the functions of reviewing, and advising departments about, the careers available to young people, with reference inter alia to the links between careers guidance in schools and the placement services for school leavers.
As an interim measure, following the acceptance of the working party's recommendations, the existing responsibilities at departmental level were transferred from the Department of Education to the Department of Manpower Services with effect from 30th September 1974. The second and main stage of the implementation, of the recommendations is the subject of the draft order now before the House.
Article 3 of the order, which provides for the dissolution of the Youth Employment Service Board on a day to be appointed by order, is a central provision of the order. Article 4 provides for the transfer of officers of the Youth Employment Service Board to the Department of Manpower Services and, together with Article 5, enshrines undertakings designed to protect their interests after transfer. Article 7 of the order provides for the establishment of the Youth Careers Guidance Committee which I have described. The remaining provisions of the order are consequential to those which I have already examined.
Taken as a whole, the order will, I believe, open the way for the development of a better employment service for young persons. I commend it to the House.

12.15 a.m.

Mr. McCusker: My hon. Friends and I view the order with grave reservations. We treat all of it very seriously. It was interesting that in the opening portion of his speech the Minister was prepared to state for the first time his true reasons for the destruction of the Youth Employment Service in Northern Ireland. I am sure that some of the members of the service will read his comments with interest.
This is an important piece of legislation. It destroys the Northern Ireland Youth Employment Service as we know it. It does away at one sweep with 13 years of work. Not only that, it sets Northern Ireland on a course not only different from Europe but different from the rest of the United Kingdom. We are denied the opportunity to amend the order. We have to rubber stamp it. I do not want to dwell in detail on procedural matters. Some of my colleagues will be able to deal with procedure later.
We consider that it is important that we are given the maximum notice of orders such as this so that we can arrange consultation and make the necessary inquiries. We are then in a position to discuss matters with our constituents and other interested parties at home. In this instance I did not have that opportunity.
I congratulate the Minister on making his point about the working party. But I am not a member of the Assembly and I did not have the information made


available to me. I was aware of the order only eight or nine days ago when it first appeared on the Order Paper and in the Vote Office.

Mr. Concannon: Copies of the order were not only made available to the Assembly members. Over 1,600 copies went out to various bodies and individuals. All the consultative processes took place beforehand. A lot of consultation has taken place since then with all the interested bodies. The order is not laid only on the date when it is laid on the Table. It was laid on 13th November both in Stormont and in the Library of the House. We did so for purposes of consultation. It was laid on the Table of the House on 5th December after all the consultative processes had been completed. I can assure the hon. Member for Armagh (Mr. McCusker) that all the interested bodies were consulted not once, not twice but sometimes three and four times.

Mr. McCusker: I was a Member of the House in March, as were all my colleagues. Some of my colleagues are not members of the Assembly. We should at least have been supplied with a copy of the order.
In making that comment I must point out that the relevant documents which we required to make a study of the order were not available to us. For example, the Employment Service Development Plan for Northern Ireland, which was printed in December 1974—it is a most far-reaching document which contains proposals of great importance and significance—was not available to us. To make any comment on the order we needed to have that document in our possession. We needed to study it in great detail. I stumbled upon it by accident when a youth employment officer came to me to complain about the order. He said that it might be value to me. I do not know whether anyone else in the House knows that it is available. If they have not seen it they cannot comment meaningfully on the order. That is one document that is not available in the Vote Office or in the Library.
Another document refers to the Youth Employment Service staff, the Department of Manpower Services; and the proposed assimilation arrangements. It goes in great detail into the manner in which it

is hoped to protect the interests of the Youth Employment Service staff. That document was printed in December 1974. To take a considered decision on the order we should have had that document before us and examined it in detail. I do not know whether any other hon. Member had that document available, but I only stumbled upon it.
The third document which I would have required was the inter-departmental committee report. I was unable to obtain it, for it was not in the Vote Office or the Library. Yet without those three documents one cannot give a considered judgment on the order. Surely the Minister accepts the obligation that the Northern Ireland Office should ensure that documents of this nature are mailed to hon. Members.
Criticism has already been made about how we should deal with legislation relating to Northern Ireland. It is evident that we cannot reach a judgment if we are to grope in the dark on a particular issue.
Let us consider the document on the inter-departmental working party. Why is it so crucial? It is crucial because in two sentences it destroys the Northern Ireland Youth Employment Service. It says:
The Inter-Departmental Working Party … highlighted the need for an integrated all-age guidance and placement service. … Schools should have teachers with appropriate training in careers guidance who would have specific responsibility for the provision of careers information and personal careers guidance.
In those two sentences the Youth Employment Service was damned.
Who composed the working party? It consisted of civil servants from the Department of Education and from the Department of Manpower Services. I had to scratch around for the information, but I was told that the committee was set up originally at the behest of the Youth Employment Service. It found itself in difficulties. It had manning problems and difficulties involving morale. It also had problems involving premises—and perhaps also the service was looking for advice and assistance. But what advice and assistance did it receive? It was disillusioned. Should that advice have been given by civil servants, or should it have been given by an independent committee on the lines of the Coleraine


Committee which set up the Northern Ireland Youth Employment Service in the first place?
Did the committee have serving on it anyone with a detailed knowledge of the Youth Employment Service? The answer is "No". Were there any Youth Employment Service officers serving on the committee? Again the answer is "No". Were there any career teachers on the committee? The firm answer is "No". One could ask what were the terms of reference of the committee and whether it was considered likely to recommend the dissolution of the service. It could be argued that the committee should have had greater representation. There are many questions relating to the degree of consultation that took place, and the method.
The Chairman of the Northern Ireland Career Teachers' Association telephoned me at six o'clock this evening to tell me that she supported the comments I intended to make on the order. She said that her association had been asked on Thursday by telephone to send four representatives to appear before the committee on the following Tuesday. I do not know whether that was considered ample time for them to consider their point of view, but she was not impressed by the consultation that took place within the association—an association representing the career teachers with whom it is hoped to build the other half of the careers guidance service now proposed.

Mr. Concannon: Perhaps I may help the hon. Gentleman. I said that, after various forms of consultation, we had published the draft order on 13th November. While we did this, and made copies available to all sorts of people—Members of Parliament, Northern Ireland Assembly men and the various libraries, we also sent copies out to and invited comments from three bodies at this late stage— the Northern Ireland Youth Employment Service Board, the Public Service Alliance, and the Northern Ireland branch of the Institute of Careers Officers. That we did on 13th November. The first two wrote back with comments, but the third body, about which the hon. Gentleman is talking, did not reply.

Mr. McCusker: Representations have been made to me during the past week by three groups of people—the association representing the careers teachers in Northern Ireland, the Northern Ireland branch of the Institute of Careers Officers, and individual members of the Youth Employment Service. Everyone in the three groups representing the people most intimately concerned and involved in the most detailed way is worried. The hon. Gentleman can list scores of people who were consulted. He can give details of the various letters sent out and the replies that were received. But if at the end of the day the people most intimately involved have reservations, the communication and consultation was not very successful. Simply to produce evidence that reams of paper were sent out and came back in again does not satisfy me that matters have been handled in quite the way in which they should have been handled.
However, the basis of this hardly impartial investigation is that the Youth Employment Service in Northern Ireland is to be destroyed. What is causing concern to many people is the fact that the responsibility for youth employment work is being removed from the sphere of education to the sphere of employment. The Youth Employment Service in Northern Ireland asked for help and finished up with a knife in its back. Putting it in terms which you, Mr. Deputy Speaker, might appreciate more than others
What man is there of you, whom if his son ask bread will he give him a stone?
The service asked its two parents, the Department of Education and the Department of Manpower Services, for help and assistance. The help and assistance was "We will remove your problems. We will remove you."
What is proposed? It sounds very nice. It is the integration of youth and adult services to provide an all-age vocational guidance and placement service. What does that mean? It is a "cradle to the grave" service in employment terms. It must be based on the assumption that people aged 16, 26, 46 and 60 have something in common when it comes to employment services.
As someone who was involved in education, I do not think that school leavers


are miniature adults. They have their own needs pattern. They are frequently immature and insecure, and sometimes lacking in confidence or over-confident. But they are certainly not miniature adults. In terms of employment they cannot be treated like someone who has had several jobs or has been unemployed for a long period, and so on.
It is said "We are helping you somewhat. We are providing a careers guidance system in the schools. We shall have careers teachers." I taught for seven years. Thank goodness that in the period since I left teaching there has been a big improvement, otherwise I should be even more critical than I am now. I am told that in Northern Ireland the beginnings of a decent career system are being developed. There are courses for careers teachers in Northern Ireland. There were no such courses in my time. But very few teachers are adequately equipped to give careers advice and guidance. I have learned that only since I left teaching. I know of many headmasters who, faced with staff absentees and shortages, would direct careers teachers to switch to something other than careers advisory work.
The question of motivation of these teachers is also important. Five or six years ago a careers teacher was appointed by a headmaster who wanted to give him extra responsibility and a couple of hundred pounds more a year. Thank goodness, that situation has changed somewhat, but it has not changed to the extent that they would give me confidence in their ability to perform this duty, and it has not changed to the extent that people in the inter-departmental group have any confidence that they can handle it either.
The Youth Employment Service provided careers guidance in the later years of a child's time at school. It assisted in the placement and in the follow-up. There was a continuity, and a relationship was established. As a member of a local advisory committee of the service I can remember many instances where the youth employment officers passed on cases involving deprived or handicapped children who faced the prospect of not getting employment, but who were, because of the officers efforts, placed in jobs. That perhaps set these people on the road to some happiness in life. I do

not see the prospect of that relationship between a group of career teachers and a group of placement officers who will not have much time to get together and discuss individuals.
We lose that relationship but we are told that there is an awareness of the problems in that direction and that the Interim Youth Employment Service will be provided. There is not much mention of that service in the development plan. The service is mentioned in connection with the assimilation arrangements. There is reference to youth employment officers becoming youth career guidance supervisors or officers.
Is it expected that there will be permanent positions within the new employment service, or will they simply last until the interim service is phased out? Will they be on a par with the employment advisory officers who will be the keystone of the new employment service? Will they be on the same scale of pay and status and so on? Are we to believe, as one could only conclude from the overall employment service development plan, that after five years there will be only employment advisory officers and that they will handle everything from youth work right across the board? If not, perhaps the Minister will give me chapter and line from the document showing what will happen.
The people who are most affected by this proposal are worried and concerned. I have here a letter from the Institute of Careers Officers. It says:
This legislation will take the vocational guidance services for young people and adults in a significantly different direction from that in England, Wales and Scotland … Recent trends in Europe have tended towards moving the Youth Vocational Guidance Services away from Employment and towards Education
Nevertheless, these people are not reactionary because they go on to say:
Nevertheless, the idea of an all-age Guidance and Placement Service is not unattractive if one were assured that the provisions for young people (in which we are primarily interested) would be strengthened, and indeed we were led to believe that this would be the case. We are now in possession of a lengthy document which sets out the future plans for the Guidance and Placement Services under the Department of Manpower Services and are very concerned to find that the main bias of the plan is towards the adult side, and, in our opinion, if these proposals are implemented, it would lead to the position where the youth guidance role of the Service would be reduced to a small and unimportant part.


Can they have any justification for making that statement? To answer that question we must examine once again our Employment Service Development Plan, which says that it sees as its primary purpose a guidance and placement service, which was an original manpower services function. It describes this as
an integrated all-age guidance and placement service. This should be a prestige service within the department. An all-age vocational guidance service staffed by specially selected and trained executive officers grade 1, called vocational guidance officers, will be established. In the professional and executive register section
—which is also a manpower services function—
there is a need to strengthen the existing service. The immediate appointment of key staff is therefore proposed. In the disablement resettlement services
—also a manpower services function—
it is considered necessary to strengthen and improve the services for disabled people".
It talks about setting up departments for looking after long-term unemployed and setting up local labour market intelligence units. In all their existing manpower services functions, those concerned thump the drum and say that they will do more. They say, for example, in American jargon, that youth employment services will become part of the multipurpose and
effective comprehensive public employment service ".
We read the following phrases:
an integrated all-age vocational guidance and placement service ".
to build a completely new structure by synthesising and developing existing elements in the employment and career, guidance field ".
multi-disciplinary, multi-dimensional service
The integration of youth and adult services will give the opportunity to provide a comprehensive range of mutually reinforcing services designed to help each individual realise his full potential.
One wonders why ordinary careers masters, youth employment officers and Members of Parliament are concerned about what we are asked to rubber-stamp tonight. It is because they have reservations, and I hope that I have convinced the Minister that they may be justified. I am not even looking at some of the technicalities that are discussed. The authors talk about the accommodation with which this all-embracing multistorey whatever-it-is-service will be pro-

vided. They say that they will have an open plan situation and that by movable screens they will create an impression of visual and aural privacy.
If I were a 16-year-old or 17-year-old unemployed youth, I would not want an impression of visual and aural privacy. I would want the reality of such privacy. I might be embarrassed about going in, even though I should not be embarrassed. I might have to tell the person interviewing me things that I would not want someone else to hear. Imagine considering an open plan with moveable screens to create an impression of visual and aural privacy.
I have some reservations about making my next point, but it may be valid. Should 16-year-olds and 17-year-olds seeking their first job, or perhaps having problems with their first job and seeking advice, have to mix with long-term unemployed people, who may have drink problems or other personal problems? Is there not a danger that there will be a rub-off in the wrong way in such a situation? If a young person, in all innocence, goes in for help and sits down to wait beside someone, might he not say in a minute or two, "I wonder whether I have done the right thing"? That is worth considering.
I come to what was said recently by a good servant of Northern Ireland, Bessie Maconachie, who in the late 1950s and early 1960s was a Member of Stormont and took a great interest in this matter. She was one of the initiators of the Coleraine conference, and eventually, I believe, took part in the moving of the legislation which brought the Northern Ireland Youth Employment Service into being.
It is an indication of how far removed in some ways people are from government and democracy in Northern Ireland now that a woman of her experience should write to the Belfast Telegraph on 10th December and begin her letter by saying:
As no debating chamber exists where this matter can be raised, I wish to express through the courtesy of your paper my concern at the proposed future of the Youth Employment Service, namely, that it should be transferred from the Department of Education to the Department of Manpower Services".
She goes into some detail, and concludes by saying:
Why now the proposed re-transfer? The public should at least know the reasons".


The Minister has given us some of the reasons.
The present trend in most countries is towards educational control. Is there need for another conference and another Coleraine committee?
If we are to put some trust back into the Youth Employment Service, perhaps there is need for another open forum where people such as Bessie Maconachie and others interested can come together. Many of them have been in touch with me over the past few days, though some would not allow the use of their names because of the positions which they now occupy. One of them, incidentally, provided me with the original documentation for the Coleraine conference.
It is interesting that in 1956 quotations were made from the report of the Ince Committee, which was set up, I believe, at the end of the 1939–45 war. The Ince Committee stressed the educational aspect of the work of the Youth Employment Service and its belief that
vocational guidance is a continuous process and one authority should carry out the whole administration, includng employment placing, which logically cannot be separated from advice ".
It seems that one can separate them now. But I am not convinced of that.
There are many people genuinely concerned on this matter. The proposals may be right. Certainly, the careers officers were not saying "No" to them but regarded them as something that could be built on. I believe that there is something in the overall plan which can be built on. But to do that we must bring the people along with us. For six years in Northern Ireland we have been forcing people to do things instead of taking them along with us. We must not adopt those tactics on a subject such as this.
I pay tribute to the Youth Employment Service. One would almost have thought that there was a vendetta against it by the terrorists, but perhaps the trouble was just the location of its headquarters. It was bombed time and again, and the building was destroyed. In more recent times, it has had to endure atrocious conditions in another spot in the town. What is more, the premises were bombed and burned in Newry. But, notwithstanding all that, the service has continued to do a great job.
The hon. Gentleman suggested that its expertise was somewhat lacking, and that its success in placement was somewhat lower than that of the more professional people in the placement service of the Manpower Services Department. In fact, last year the officers of the service dealt with 30,000 young people, and placed 7,000 of them. I am assured that the 7,000 reflects only the number which they can actually count and there were probably many more whom they managed to place through further education and other means. I know also that 7,000 out of 30,000 will show up favourably in comparison with any other professional placement service in Northern Ireland.
The Youth Employment Service has done a tremendous job during the past 13 years, in extremely difficult circumstances. I hope that the assurances we have been given will ensure that they do not suffer as a consequence of any of this legislation, which unfortunately I have no alternative but to allow to go through.

12.45 a.m.

Mr. John Biggs-Davison: The Under-Secretary said that this is an important order, and indeed it is. Youth unemployment is part of the Ulster tragedy. School leavers and other young people without work may be drawn to criminal or political violence from which satisfying, useful employment might have preserved them. We all therefore pay tribute to the courageous and constructive work of the Northern Ireland Youth Employment Service and Board.
I am glad to follow the hon. Member for Armagh (Mr. McCusker), who spoke from great experience and who in his cogent and eloquent speech demonstrated yet again the inadequacy of our procedure here and the insufficiency of our information.
For my part, I have not yet been persuaded that much good, if any, will be gained for young Ulster people from this bureaucratic rearrangement. If the House is not satisfied, the Under-Secretary should seriously consider withdrawing the order so that the House may deliberate further at a more convenient hour. I know that the appointed day is intended to be 1st January. I know that the Minister of State said on 12th September, when he announced that the


Government had accepted the report of the interdepartmental working party, that the changes would be completed by 31st December. In mind, of course, was a meeting of the Privy Council. But what is the hurry?

12.47 a.m.

Mr. J. Enoch Powell: I do not think anyone could listen to the thorough and fascinating speech of my hon. Friend the Member for Armagh (Mr. McCusker) without realising that our proceedings on the order before the House raise very important questions of a procedural nature. I hope that what we have experienced with this order tonight wi!l not be repeated. I noticed that the Lord President of the Council made a very brief appearance earlier, but I am fortified by the presence on the Treasury Bench of two distinguished members of the Whips' Office, who I am sure will ensure that serious consideration is given in the highest quarters to the suggestions which I wish to make.
There is no substitute for legislation. If there had been any substitute for legislation, Parliament would have found it long ago and would have adopted it in place of legislation. If a change as far-reaching as the order makes in the organisation of the Youth Employment Service were being made in the rest of the kingdom, before there was any question of a Bill being introduced there would certainly be a Green or a White Paper, on which there would be both the opportunity of debate in this House and certainly the extended opportunity of consultation outside, not only between interested parties and between the Department and all concerned but between hon. Members of this House and their constituents, which is one of the most important consultations that can take place.
That presentation of the Government's intentions in the form of a State paper, properly published through the Stationery Office and available to us in the Vote Office, would have been followed by a Bill, which we would have first considered in principle and would then have been able, with the possibility for the Government to have further thoughts at later stages, to amend on two stages during its passage through this House.
That is what legislation means. I hope that more and more legislation

referring to Northern Ireland will be combined with legislation for Great Britain, with or without an application clause, as is often found in Acts with special application, for example, to Scotland, so that, without any additional burden being placed on the Government's legislative programme, as good consideration can be given to legislation which applies to Northern Ireland as to that which covers the rest of the country.
Even where for compelling reasons— and I think they need to be compelling reasons now—the law in Northern Ireland has to be different in principle, as in this case, from that in the rest of the United Kingdom, I hope that the Government will find it possible to deal by legislation with at any rate major matters of the kind we are considering. Hon. Members representing Northern Ireland constituencies have given sufficient evidence that they approach legislation affecting that Province in no spirit whatever of wasting the time of the House or of the Government but with an entirely co-operative intention.
I am sure that where legislation is used, where a Bill is introduced, as it should be, to do things as important as this, even where it has to be a separate Bill for Northern Ireland, very little in terms of time would be lost but a great deal would be gained by the co-operation and the understanding of the outside public, which can be secured only through the proper legislative process. I hope that that will increasingly be the situation. I hope that we shall increasingly be legislating, in the proper sense of the term, for Northern Ireland as a part of the United Kingdom.
Meanwhile we have what is generally recognised as a make-shift procedure. I wish to make a suggestion for a rule of practice for which there is an analogy in the current procedure of this House. Hon. Members who were kept up to the early hours of yesterday morning were considering EEC legislation. They found that in doing so they were increasingly assisted by a regular routine. They were not merely presented with the EEC document which corresponds to the order before us tonight. They were also supplied—or had a right to complain if they were not—with an Explanatory Memorandum from the relevant Department


and with all the relevant documents which bore upon the contents of the instrument before the House.
I believe that we should adopt the rule —and I hope that the Government will consider this and that in replying the Minister will be able to say that at least serious consideration will be given to this proposal—that orders of this kind are not placed before the House for approval unless they have previously been accompanied by an Explanatory Memorandum setting out the policy and the Government's intentions which underlie the order, and also by an indication of all the documents which hon. Members need fully to understand what is intended, which documents ought to be available cither through the Vote Office or at any rate in the Library, as may be convenient.
It would not then be necessary for my hon. Friend the Member for Armagh and others to stumble upon what they need to do their job properly. This need not involve an undue loss of time. I notice that this order was laid on 5th December, a week ago. I suggest that if notice had been given of this order, with the Explanatory Memorandum and a supply of supporting matter, three weeks earlier, every hon. Member who was interested would have been able, in due time, to consult those of his constituents who were affected and who were expert. The debate need have taken no longer, but it would have taken place against a background of a House which was better prepared for doing its job.
There were references in another place when the same order came before it to the possibility of a Committee procedure. Whatever may be decided on that head, a Committee procedure is no substitute either for legislation or for the proper presentation of material accompanying one of these legislative orders. I am far from convinced that much is gained by a Committee mulling over the text of an order either before or after it is presented to the House. My prejudice is that the normal procedures of the House by legislation or by order, if hon. Members arc provided with the necessary supporting material, will be found to be perfectly adequate to our requirements.
I only wish to add—and I am sure that the Minister will be sensitive to this —that we are in somewhat of a quandary

tonight with this order because all the policy decisions have essentially been committed. In one of the documents stumbled upon by my hon. Friend the Member for Armagh, the Employment Service Development Plan, dated December, we read that it had been decided— not here—that from 30th September the responsibility for the functions of the Youth Employment Service should be transferred to the Department of Manpower Services. Three months ago the responsibility was transferred—that is an act of policy—without debate in the House. We are concerned now with clearing up after the crucial act of transfer of responsibility. Then, we are told, from the new year it is planned that the Department of Manpower Services should become directly responsible.
When the planning of a new service is at an advanced stage, no one wants that to be interrupted by objection taken to an order of this kind, but the fact remains that the debate upon the order is the only opportunity which the only democratically elected representatives of Northern Ireland have had to consider the policy as well as the application of a big development or change. It is the more serious because, as has been twice pointed out, it runs counter to the trend in Great Britain and elsewhere. Therefore, it was all the more necessary that there should be at the proper time a discussion of policy from which we could have proceeded to consider speedily the details of the method by which it should be implemented.
I conclude by saying that I hope that the occupants of the Treasury Bench will agree that a modest and reasonable request has been put forward on behalf of those who represent Northern Ireland constituencies, and that the Minister will be able to indicate that this request will be seriously considered for the future, so that we have no repetition of tonight's embarrassment.

1.0 a.m.

Mr. James Kilfedder: I am opposed to the order but, because of the very nature of the way in which Northern Ireland legislation is introduced into the House, we cannot amend it, otherwise I would try to do so, and radically. All I can do is express my opposition, when the Question is put, by shouting, "No". That is all I can do, and I shall do it to express my opposition.
Youth employment is the poor relation of the employment and educational services and although the Under-Secretary of State is not suited to the rôle of Prince Charming, he is trying to fit the glass slipper of youth employment, which is the Cinderella of the services, on to another one of the ugly sisters. He is taking the glass slipper away from Cinderella herself in the person of the Department of Education. The Youth Employment Service was first put under the Stormont Ministry of Labour and National Insurance, then into the Department of Health and Social Security, and then the Department of Education and Science. Now the hon. Gentleman is struggling to force the slipper on to the large foot of the Department of Manpower Services.
I cannot understand the indecent haste. Youth employment properly belongs to the Department of Education and Science, which it has never been given a chance. I do not see any justification for this precipitate action. The hon. Gentleman should take the order away and have the matter properly considered.
It would make some sense if the changeover were to take place at the beginning of a financial year. There is no significance, of which I am aware, in making the changeover date from the beginning of the calendar year. The hon. Gentleman's statement regarding the proposed change was made on 12th September. Perhaps he can tell us whether full discussions have been completed with the board and its officers. Is he satisfied that everything possible has been done to reassure the officers as to their future? What about important matters such as the assimilation of existing staff? Will they retain their present ranks, salaries and conditions of service without any doubt? I know that there are references to this in the order, but I should like the hon. Gentleman's direct assurance.

Mr. Concannon: indicated assent.

Mr. Kilfedder: The hon. Gentleman nods his head, and I accept his assurance. Would it not be good industrial relations practice for the existing board to continue in existence until the negotiations with the staff were fully completed? Is the hon. Gentleman really satisfied that the staff are happy with the present situation?
The order hijacks the staff out of the board's employment and pushes them willy-nilly into the Civil Service.
When the Albemarle Committee reported on the future of the Youth Employment Services in England and Wales in, I think, 1966, the House debated the perennial question of where is the proper home for such a service—in the employment sector or in the education sector?
I remember taking part in that debate, and I look back now on the first four to five years of the existence of the Northern Ireland Youth Employment Service. It had a number of features which were clearly sensible. At the time of the establishment of the service, there were in Northern Ireland eight local education authorities. Each was too small and covered too restricted an area to be able to run at successful youth employment service geared to placing young people in employment and providing careers guidance for school leavers. It was right, therefore, when the service was set up, that the board should have centralised its services and overcome the difficulty of size.
The board was a pioneer in another way. For the first time in the United Kingdom, we had at that time in Northern Ireland a job-finding and job-placing authority, which did not also have to pay out unemployment benefit. It was this which distinguished the Northern Ireland Youth Employment Service from the service in Great Britain. It is therefore shabbly treatment that this order should have been produced in its present form.
There were other differences, too. The service in Ulster, as distinct from the one in Great Britain, was able to attract a large number of academically-qualified people as youth employment officers. Unfortunately, staff turnover was great. The job had no career prospects to offer the ambitious. It was regarded as a stepping stone to more lucrative employment in personnel with private industry. The early hope that youth employment officers would interchange easily with schoolteachers was never realised.
The fault may have been that the service was under the control of the old Ministry of Labour at Stormont, which was inclined to treat it as an adjunct of its labour exchanges.
The service was also bogged down by the weight of its advisory committee structure. There were no fewer than eight county advisory committees for a service which covered a population no larger than an average size English LEA, with only 25,000 school leavers a year, 3,000 of whom went on to further education.
Research at Birbeck College in London shows that most school leavers still rely on advice from parents, friends and advertisements for employees. Advice from careers advisory officers and careers teachers comes fourth or fifth in importance. I do not know whether that position will be improved by transferring the service to the Department of Manpower Services instead of improving it whilst under the control of the Department of Education. There is no evidence to suggest that it will improve. There is nothing in the explanatory document accompanying the draft order indicating that there is any hope that the pattern will be changed.
I should like the Minister to explain certain points made in the explanatory document. In paragraph 5 it states:
the board was divorced from the main stream of employment work ".
Whose fault is that? Is that not a lack of liaison?
Thus it had insufficient means and resources to exercise its responsibilities as effectively as it would wish.
Surely that means that there was a lack of funds.
The paragraph refers to the
difficulties of securing effective follow-up and validation of placements".
What follow-up is there in the adult service? What is meant by "validation of placements"? Towards the end, it states:
the Service had been unable, because of its small size, to develop adequate resources for research into employment needs".
Surely the lack of funds had more to do with that than its small size.
Finally, the last sentence states:
The provision of a headquarters and area office structure had imposed administrative burdens on senior officers of the Service.
If that is true, the answer is that more staff should have been employed. What is set out in paragraph 5 is an indictment. It does not support the Minister's argument that the Youth Employment Service

should be transferred to the Department of Manpower Services. It means that the Youth Employment Service was never properly supported.
The Department of Manpower Services is running a general service for all ages from 16 to 65. In England, it has always been recognised that there is a special problem with the school leaver. That has been the justification for the separate Youth Employment Service. I do not accept the Minister's argument as justifying the amalgamation of the Youth Employment Service with the all-age service.
The Minister has avoided the real issues. I believe that the order is a retrograde step and I am opposed to it. The Youth Employment Service has been starved of adequate funds since it started in 1962. It was run on a shoestring. It was provided with fifth-rate accommodation in near derelict buildings, badly furnished and ill-equipped. While local labour exchanges in Northern Ireland were new, bright and cheerful, the youth employment offices were generally dull, cramped and ancient.
When the Youth Employment Service was transferred to the Department of Education eight years ago the move was widely welcomed by educationists and others in Northern Ireland. I am not certain why there has been this change of attitude on the part of certain people. I do not believe that there has been a thorough investigation into this matter. It seemed right that the service responsible for the school system should also be responsible for careers guidance and the placing of young people in their first employment.
The 1965 move from the Ministry of Labour to the Ministry of Education regrettably made no difference to the standing of the service. It was treated like an unwanted and unloved child. Virtually nothing was done to encourage a closer working link between the youth employment officers and careers teachers.
I believe we have another 30 minutes left in which to finish this debate.

Mr. Deputy Speaker (Mr. George Thomas): The hon. Member is under a misapprehension. We have just over 20 minutes left.

Mr. Kilfedder: I know that the Minister is very anxious to answer the


points raised by the Opposition. However, I should still like to deal with two other matters.
May I ask the Minister if he will deal with the question of the attitude of people in the EEC countries to youth employment? The transfer of the service to the Department of Manpower Services is contrary to the general practice in the Common Market and elsewhere. The general trend within the EEC is to transfer the youth guidance service to the education service. Therefore, the Government are now committing themselves in Northern Ireland to a reversal of the general trend which is supported by the educationists and people who are knowledgeable about employment for young people.
However, all is not lost. There are certain safeguards which can protect the school leavers' service. At least there is that satisfaction. But it is little.
I do not welcome the order. I think that it is misconceived. It marks the end of a specific Ulster creation which could have been a pioneer in youth employment if only it had been given the funds. During its short life the Youth Employment Service Board did a good job. We all pay tribute to the work it did and the work of the officers. The Department of Manpower Services is taking over a dedicated organisation, which I trust it will not destroy. I trust also that the Department of Manpower Services will make better use of the men and women who comprise the Youth Employment Service than the educationists who seemed not to know what to do with them.

1.15 a.m.

Mr. Concannon: The House is indebted to the hon. Member for Armagh (Mr. McCusker) and the other right hon. and hon. Members who have spoken in this debate because they have underlined the dilemma in which we find ourselves when debating orders of this kind.
Let me say at the outset that how and when we debate orders of this kind is not a matter for me. However, my right hon. Friend the Secretary of State told the House recently that the Government had been looking carefully at how to provide a more satisfactory procedure for taking through this House the orders made under the Northern Ireland Act 1974. We have now completed our examination, and I

am glad to say that the Government will shortly be proposing through the usual channels that these orders shall be referred to a special Northern Ireland Orders Committee for debate and consideration. It is hoped that this procedure can come into operation very soon and that orders such as the one being debated tonight can be taken in this Committee where we hope that they can be given fuller and more detailed attention than is possible on the Floor of the House.
We Ministers welcome this suggestion, as I am sure will right hon. and hon. Members—

Mr. Powell: The Minister will appreciate that what he has just said differs considerably from the point of view of hon. Members on these benches. Therefore, I trust that what has been said tonight will nevertheless be taken carefully into consideration before any step is taken.

Mr. Concannon: I am sure that all that right hon. and hon. Members have said will be taken into consideration. But I thought that that should be put on the record.
This debate has shown that there has been a lack of communication. I regret very much that the hon. Member for Armagh (Mr. McCusker) was not able to be in on this at an early stage. I am sure that his old union would have been indebted to him if he had been. But I assure hon. Members that we have not been trying to railroad this through in any way. In fact, the opposite is the case. Consultations on it have been taking place for almost a year. We have done the proper thing with the order. In the case of Northern Ireland legislation, the system provides for consultation in the form of the publication of orders as proposals before they are formally laid before Parliament. The orders are made available as proposals in the Westminster and Assembly Libraries and are thus made available to all hon. Members and Assembly Members. Attention is also drawn to them by means of Press releases. Copies are sent to interested parties. Only then is an order formally laid before Parliament.
The consultation process was carried out with this order, in addition to the implementation of the recommendations


made by the working party, which were made and accepted only after a great deal of discussion with interested persons and organisations. Obviously we shall have to look further into this, in view of what right hon. and hon. Members have said. There are possible refinements, and we shall consider them. But all this has taken place over a year. Part of the Assembly work was in this order, and part has come out of it.
We have to make sure that we do not have this lack of communication again. I shall do all that I can to reassure right hon. and hon. Members about that. But I stress that a great deal of consultation has been taking place.
It is true that the working party was composed of departmental representatives. However, its task was to correct the views current about the future of the Youth Employment Service and to see whether it could suggest any clear path for the future of the service. It did. There was a clear consensus that the service should be radically reshaped. The consensus was reflected in the report of the working party. It was further verified in the extensive consultative process to which the report was exposed. Therefore, the proposals in the draft order reflect the wishes of both sides of industry in Northern Ireland as well as those of the educational interests and the staff of the Youth Employment Service.
I should make it clear that the proposals in the order were one of the options which the Youth Employment Service Board suggested must be considered when the future of the service was being examined. After that a great deal of consultation about the order has taken place in a number of stages.
First, the working party, before reaching conclusions, consulted a wide range of interests, including the Director and Deputy Director of the Northern Ireland Youth Employment Service Board, the board itself, the Northern Ireland Schools Careers Association, the Confederation of British Industry, the Association of Chief Officers, and Area Education and Library Boards, the Northern Ireland Council of Social Services, Educational Guidance Service for Adults, the Institute of Careers Officers and the Northern Ireland Committee of the Irish Congress of Trade Unions. All these views were considered

before the working party prepared its report.
Second, before any decisions were taken to implement these recommendations, the working party's report was distributed to a wide range of interests. Some 1,500 copies were distributed to all Members of the Assembly and 64 other interested persons and organisations. A total of 33 replies were received and all of these replies were taken into account before deciding to proceed with the working party's recommendations. Naturally a variety of comments were made but the great weight of these were in favour of what the working party had proposed.
Third, after a proposed order had been drawn up—hon. Members will remember that the order merely makes possible the implementation of recommendations which had already been discussed in a way I have described—the proposed order was published on 13th November and attention drawn to it through the Press; copies were sent to the Northern Ireland Youth Employment Service Board; the Institute of Careers Officers and the Northern Ireland Civil and Public Service Alliance, who were asked for their comments. Copies were laid in the Parliamentary Library and in the Library of the Northern Ireland Assembly. Thus, in addition to the action which had been taken through the circulation of the report, it was ensured that elected representatives were aware of what was going on and had an opportunity to put forward their views. The hon. Member for Armagh has shown up a weak link which we will consider. None of the comments received in response to the proposed order raised any fundamental objections of principle. After the comments had been received the order was formally laid before this House on 5th December.
Hon. Members need have no fear that the Youth Employment Service is being dismantled before adequate arrangements have been made for its replacement, or that there will be insufficient attention given to the question of careers guidance within schools. The whole purpose of the order is to improve the service, including the arrangements for career guidance, and not undermine it. First, I would remind hon. Members that it is the intention to improve the arrangements for careers guidance by ensuring that in schools there are appropriate numbers of specialist staff


fully trained in careers guidance matters. I emphasise that this is not a task in respect of which half measures can be approved. It is important that those undertaking it should have the expertise and training appropriate to the task. These personnel will be part of the schools system and will work within it.

Mr. Carol Mather: Does the All-Age Guidance and Placement Service place people outside Northern Ireland, and if so, what proportion, or is it entirely within the Province?

Mr. Concannon: This is a Northern Ireland order, so I assume that it applies within the bounds of Northern Ireland. If I am wrong, I will write to the hon. Gentleman on the point.
Second, the Department of Manpower Services' Employment Guidance and Placement Unit will maintain very close contact with the schools and ensure that they have all the support that they need. The Department's extensive knowledge of the opportunities that are available on the labour market will be at the full disposal of young people who will thus enjoy a service which they were not in a position to benefit from fully in the past. Likewise, schools careers masters will be given full backing so far as educational needs are concerned by the area education and library boards and by the Department of Education. These arrangements are not referred to in the order, because they will be carried out under powers which exist under other legislation. They are, however, very much part of the working party's recommendations whose implementation this order aims to promote.
Thirdly, a Youth Careers Guidance Committee is to be established which will contain a substantial representation of educational as well as employer and employee interests. The committee will advise the Department of Education and Manpower Services on the adequacy of the guidance and placement services, the links between the two, and related matters. It will thereby help to ensure that interested persons in both the educational and industrial worlds have a voice and that appropriate weight is given to the matters which lie within the order.
Having said that to hon. Members who have spoken against the order, let me say that all the points that have been taken about communication—

Mr. McCusker: I may have given the impression of speaking against the order. Perhaps I was motivated by some of the other factors about which we have spoken. I take the attitude that has been taken by most Members who have participated in the debate—namely, that within the overall plan there is something attractive, something good and something that can be built upon. We want to know that sufficient emphasis is being placed upon that. That is where our doubts lie.

Mr. Concannon: I hope that in my last few sentences I have removed some fears. I give the hon. Member for Armagh and his hon. Friends the assurance that the communication problems that they have mentioned will not be repeated. I hope that very soon we can adopt another system of discussing orders instead of coming here late at night. I estimated that I should be here until four o'clock this morning. It now seems that I shall have the bonus of an extra couple of hours sleep.

Mr. Kilfedder: Will it be possible for the officers to transfer easily and freely between the Northern Ireland service and the service in Great Britain under this order?

Mr. Concannon: As this is a Northern Ireland order I assume that if officers want to transfer they will have to go through the usual means of transferring. The hon. Member for Down, North (Mr. Kilfedder) has reminded me of an assurance that I should have given about the transfer of the staff within Northern Ireland between the two departments. I think that all the fears that have been expressed by the hon. Gentleman and his hon. Friend the Member for Armagh can be scotched. I think I can give hon. Members the assurance they seek regarding the personnel.

Question put and agreed to.

Resolved,
That the Youth Employment Service (Northern Ireland) Order 1974, a draft of which was laid before this House on 5th December, be approved.

Orders of the Day — PATENTS

Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments),
That the Patents (Fees Amendment) Order 1974, a draft of which was laid before this House on 26th November, be approved—[Mr. Walter Harrison.]

Question agreed to.

Orders of the Day — WEALTH TAX

Ordered,
That a Select Committee be appointed to consider the Green Paper on proposals for a Wealth Tax (Command Paper No. 5704) and to report thereon.

Ordered,
That the Committee do consist of Twenty-one Members.
And the Committee was nominated of Mr. Guy Barnett, Mr. Jeremy Bray, Mr. Ray Carter, Mr. William Clark, Mr. Robert Cooke, Mr. Tarn Dalyell, Mr. Denzil Davies, Mr. Gow, Sir John Hall, Mr. Paul Hawkins, Mr. John Horam, Mr. Douglas Jay, Mr. Maurice Macmillan, Mr. Robert McCrindle, Mrs. Millie Miller, Mr. John Nott, Mr. John Pardoe, Dr. Colin Phipps, Mr. John Roper, Mr. Timothy Sainsbury, and Mr. Brian Walden.

Ordered,
That the Committee have power to send for persons, papers and records; to sit notwithstanding any adjournment of the House; to adjourn from place to place; to report from time to time; and to report Minutes of Evidence from time to time.

Ordered,
That Five be the Quorum of the Committee.

Ordered,
That the Committee have power to appoint persons with expert knowledge, either to supply information which is not readily available or to elucidate matters of complexity within the Committee's order of reference.— [Mr. Walter Harrison.]

Orders of the Day — EXPENDITURE

Ordered,
That, notwithstanding the Order of the House of 18th November relating to nomination of Members of the Expenditure Committee, Mr. John Cope be discharged from the Committee and Mr. Roger Sims be added to the Committee for the remainder of this Parliament:

Ordered,
That this Order be a Standing Order of the House.—[Mr. Walter Harrison.]

Orders of the Day — ADJOURNMENT

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Walter Harrison.]

Orders of the Day — HS146 PROJECT

1.28 a.m.

Mr. Paul B. Rose: A week ago I had ray first experience of flying in a Hawker Siddeley 748. No doubt it was built in Manchester by many of the friends of the Minister and myself. The flight was to Antigua and the tour operator was LIAT.
I learned two matters in particular as a result of the visit. First, the HS748 is an excellent plane. It is ideally suited for short runways and rough terrain and for the needs of less advanced countries. It is admired for its reliability and flight performance. The question that faces us is what is to take its place when its generation, and even the modified jet version, has outlived its time.
The nub of the issue in relation to the HS146, which is the issue of the debate, is whether we are now witnessing the demise of the British airframe and design industry. It is no more and no less than that. It involves the question whether we are to abandon that plan, with all the advantages of the HS748 and a good deal more besides—with its lower operating costs, take-off ability, increased capacity and all the rest. When we nationalise the aerospace industry we are in danger of being left with our share of the Concorde—a project which I believe is distinctly suspect from a number of points of view, ranging from social and environmental aspects to economic considerations.
When I was in Antigua I saw how catastrophic the co-called expert economic advice can be. One of our top economists advised Antigua to cease production of sugar. It took that advice. Now, when one visits that country one sees the residue of sugar cane and abandoned derelict sugar mills, rusting railways and all the rest, at a time when the world is crying out for more sugar and


is willing to pay the price for it—a price which has soared.
This reminds many of us of how we squeezed our mining industry a few years ago because of an arid economic appraisal of fuel costs outside the context of our balance of payments and changing forces in the world. We now find ourselves forced to import more oil and it has swept us into economic crises of frightening dimensions. That is the result of economic forecasts arrived at in a vacuum.
Although I recognise the argument against sinking money into an HS146 project at a time when, according to economic theorists, public expenditure should be pruned, I believe that there are overriding considerations, which I shall seek to put to the Minister. I wish to refer to the appalling prospect facing this nation in the 1980s without an airframe industry or design teams. It involves the gratuitous throwing away of the skill and technological know-how which has been accumulated in half a century of endeavour.
The HS146 project must be considered in context in the short term, and its future looks very healthy. But there are far more profitable fields of investment outside aerospace which promise greater return. However, the abandonment of the HS146 enterprise, even within that context, would leave a yawning gap. It will be not only a short-term but a shortsighted decision in a situation in which there is a promising market for this aircraft—a market which is likely to increase as more countries decide to go in for short-haul feeder aircraft.
It is suggested that escalating costs and a shrinking market, as well as deterioration of customers' finances within the overall context of fuel price increases, result in an even more difficult decision. These are obstacles which the union concerned has not taken lightly. There are long-term implications in abandoning the project which override those other considerations—not least the 300 to 400 immediate redundancies which may result from abandonment of the project and, ultimately, the 20,000 redundancies which may follow.
The destruction and disintegration of the design team and its potential would be an act of industrial vandalism which no Labour Minister would permit. After all that my right hon. Friend the Secretary

of State for Industry has said about greater worker participation—he has done a signal service to this country by emphasising this aspect to the man on the shop floor, who deserves a real stake in industry—and after the tripartite talks have taken place, he will surely not abandon that philosophy, as he appears to be in danger of doing. I trust that he will listen to the voice of the trade unionists who have struggled so valiantly to preserve this project and to get it off the ground in more ways than one. They are, frankly, disappointed, as I am, by his statement on Monday. At the very best it was a holding operation—a sort of palliative. It put the project on ice. At worst, it was the first overt indication of what may well be an ultimate decision by a future nationalised aerospace industry to abandon the project altogether. I believe that my hon. Friend the Under-Secretary will take the point that it would be kinder to do the latter now rather than seek to draw off the heat by some unsatisfactory formula. I shall explain why shortly.
In any event, it will not take off the heat because this campaign will continue. It will grow in strength, whatever the outcome of tomorrow's talks. I pay tribute to the remarkable persistence of the trade unionists concerned and the way in which they have marshalled their facts and put their case to many of my colleagues and myself. I have been very impressed with this, and with the myriad of facts which have come before me. This is an example of the way in which workers, having confidence in their own project, are able to put a case before the House through their Members of Parliament.
The vital element here is that every month of delay will make it that much more difficult to compete in world markets. Indeed, by our procrastination we have already encouraged others to enter the field and to enter the competitive market which we have to penetrate. We have taken no action—as a Labour Government ought to have done —to encourage British Airways, for example, or the Ministry of Defence to consider its replacement needs in the light of the requirement for a home market base for the 146 when, for example, the Viscounts were phased out. I believe that the Department of Trade is open to criticism here. It seems to have


failed to appreciate the need for co-ordination of an integrated strategy in the public sector, which includes not only the purchase requirements, say, of British Airways but the construction of airframes and aircraft and the design of those aircraft, and looking at all that within one context in the public sector. We have seen that lack of understanding within the Department with regard to co-ordination on the continental scale, but I say no more about that.
I also hope that there will be more co-ordination with the Ministry of Defence when replacements are required there, and with the Ministry of Overseas Development, because there is a great deal of room for loans and long-term credits, and even for grants that could assist in purchasing an aeroplane such as the 146 that is admirably suited for developing countries.
On 1st July this year the Secretary of State for Industry, by implication, criticised the unilateral decision of Hawker Siddeley to pull out of the contract. I entirely endorse what he said. The Minister stated, in relation to what he recognised was the only major new civil project then in progress:
Clearly no Government could view its cancellation without serious concern if this country is to remain a leading aircraft manufacturer in the future to meet a world market which, whatever its short-term difficulties may be, is likely to continue to grow.
I agree with him. I cannot see what has changed since then. He pointed out that
Cancellation of a project of this magnitude, amply and adequately backed by a Government launching contribution which allowed it to go forward, would be a very serious thing.
That is precisely what has happened. I ask my hon. Friend: why allow it? Why not take the action which the Conservative Government took in relation to Rolls-Royce? I want to know how a future nationalised industry will fill the gap unless this decision is taken now? The Government cannot procrastinate any further. They must decide what sort of aircraft industry they want before any move towards nationalisation is taken. If it is not possible to have what we want because Hawker Siddeley's commercial considerations vitiate it, the Government should act swiftly before they lose these potential markets and sacrifice 20,000 jobs. They can do that very quickly.
The aircraft that a future nationalised industry should be producing is a feeder airliner which could carry 70 or 100 passengers, which is ideally suited also to freight and military purposees, capable of taking pallets and with remarkably few technological and technical risks. It would be geared to a market that many of us believe will expand rapidly in the later 1970s, and to new markets. Therefore, a formula must be worked out to persuade Hawker Siddeley to resume work. Parliament allowed a sum of money, and £44 million of that could still be released. That would produce two prototypes and allow us to lose no time in producing aircraft prior to nationalisation of the aerospace industry.
The figure of 50 per cent. was quoted. I see no reason why, tomorrow, if it is needed, a figure of more than 50 per cent. should not be offered. If that does not bring Hawker Siddeley to the position where the company is willing to go on with the project, in January a short swift Bill could be introduced to nationalise that sector of the company. Assets of about £40 million are involved. To quote one gentleman, "If we do not do this we are going to be in the soling and heeling business without any uppers." Possibly we shall be down on our uppers if that happens. We shall be engaged in the aircraft industry in improving Nimrods and lengthening the life of Tridents, but with no real content to the industry, no future capacity for new design or construction.
What makes sense for Hawker Siddeley in an investment yield on capital, given its other profitable fields in engineering and instruments, does not necessarily accord with the national interest of a national aerospace industry. While the industry and Sir Arnold Hall fiddle—I use that word in its honest sense—the DH7 short feeder plane is being ordered into production in Canada. It will inevitably take some of our market, even though it is a smaller aircraft. Certainly DH, Boeing and Fokker are all optimistic. They all feel that there is a bright future for an economical and flexible short-haul plane. If they feel that why are we not justified in taking the same view, and why do we hold back to let them all take the market before we start.
The essence of this problem is time. Instead of putting the project back and


putting the sub-contractors on ice, with the inevitable penalty payments, we could still get the 146 in the air by between September and perhaps, at the latest, December 1976. The design is 75 per cent. complete. Tooling is 40 per cent. complete. If a decision were taken, say, on a vesting day for public ownership, such as January 1976, we would have lost a most valuable year and the markets would already have been penetrated.
The staffs co-ordinating committee anticipate a market of 400, with more than £1,000 million return on exports on an estimated investment by the Government of £120 million over the next three years. As the Trident and the 748 move out of production the 146 could be phased in. There will be a need for replacements for 35 Viscounts, and it seems to me that the time scale of the 146 would be ideal while delay would mean disaster. Perhaps delay would be worse than outright cancellation. Delay might lead to the production of the plane when it is no longer economically viable. But whatever we do, cancellation will mean a North American near-monopoly in civil air transport. The Financial Times of 23rd October said that
if the HS-146 is finally axed, it means that Britain, with the biggest aerospace industry in the world outside the U.S. and the Soviet Union, is admitting publicly that even with a measure of Government cash aid it can no longer afford to develop a new civil airliner on its own, even of such comparatively small size and well-understood technology as the HS-146.
I hope that that is not something my hon. Friend would countenance.
There is a possibility of joint financing with European counterparts. Without the 146, far from exporting we shall be purchasing our aircraft abroad by the 1980s —purchasing the Fokker F28 instead of boosting our own exports. We shall have to pay more to our sub-contractors if we do not start now. Either way, the arguments are in favour of getting on with production as soon as possible.
By guaranteeing the money already allocated by statute prior to nationalisation, we can avoid those consequences. The initiative must come from the Government; it will not come from Hawker Siddeley. I accept that there is no crystal ball that will prove that it will be economically successful, or will fail, but I think that my hon. Friend will take into con-

sideration, particularly after today's balance of payments figures, the fact that last year our aerospace exports were £520 million—a major contribution to our balance of payments. It was a particularly big contribution in relation to imported raw materials. That is because the aerospace industry relies on skill. Our skills will be absorbed by our competitors if the decision is made on short-term economic factors alone against the production of the 146.
I hope that my hon. Friends will not plan on the assumption of inflation that will continue indefinitely, because that way lies paralysis. I trust that my hon. Friend will now, having given a distinct impression of temporary paralysis, regain his nerve, take a courageous decision and place confidence in the industry, and above all in those who work in it. If he does, he will find that there are growing markets that can be penetrated and that we have the product to sell in them.
This year the aerospace industry may well export as much as £600 million worth or £700 million worth of production. What will be the figure in 1980 or 1984? If we fail to produce the 146, will the figure be reversed? Shall we find, as we did with coal, that we have to import rather than export, because we failed to boost our own industry?
What is good for Hatfield, Brough, Woodford and Chadderton is good for Britain. For that reason I ask my hon. Friend and my right hon. Friend, who will no doubt be at the talks tomorrow, to listen to the action committee of hon. Members—the 60 or so hon. Members who have supported the motion, to the shop stewards and the representatives of the workers on the shop floor in the industry and in the unions, and find a way of seeing that the 146 is launched. For the sake of the industry, my right hon. Friend dare not fail.

1.49 a.m.

The Under-Secretary of State for Industry (Mr. Michael Meacher): I am most grateful to my hon. Friend the Member for Manchester, Blackley (Mr. Rose) for raising this important subject. I am impressed by the content of his speech and the restrained but forceful way in which he put over his case.
In the few minutes left I shall try to clarify a number of the issues. As my


right hon. Friend the Secretary of State told the House on Monday, we have decided that it would be wrong to take on 100 per cent. funding of the project in response to Hawker Siddeley's action in terminating the project. When the project was launched in August 1973 the then Government agreed to invest a fixed sum of £40 million at 1972 prices, calculated as about 50 per cent. of the estimated launch costs.
When we came into office the Government were quite happy to continue the project on this 50 — 50 basis, which meant, among other things, that the management had a sizeable financial stake in its success. But 100 per cent. funding is a very different proposition, especially when management has lost some of its faith in the project's viability, certainly in the short term, though I agree that it still has confidence in its technical merits. Moreover, present circumstances are very different from those prevailing in 1973, as I shall hope to show.
My hon. Friend raised the question of the Government's latest assessment of the project in general, and I shall make one or two general points about that. First, the detailed market forecasts and so on, undertaken by the firm's and the Government's experts would be useful to our competitors. We are keeping open the option of continuing. We do not want to strengthen the position of our competitors by referring to our own work.
The second point I make in this connection is more basic. Assessments in this field depend on assumptions about a variety of inputs—the size and spread of the market, which in turn depends on general economic conditions, the strength of the competition, and so on. Forecasting as far ahead as we must inevitably seek to do is particularly difficult in times of inflation. One has to take a view of the rate of inflation in this country as against that in other countries, and the extent to which exchange rates will alter these facts in compensation. However, I still propose to be as forthcoming as is possible on our assessment.
When it was launched, the company thought that it would sell some 400 aircraft by 1985 and that this might turn out to be a pessimistic forecast. At the time, those who examined the project within Government Departments accepted

that a market of this size might be captured by Hawkers, though particularly with this type of aircraft selling over a considerable period, in small numbers, to a wide variety of airlines, the forecasts were inevitably rather speculative.
There have been significant changes in the world economy since the project was launched, brought about, of course, by the oil crisis, in particular. The market visualised for the HS146 has been put back. The company has told us that it believes that a potential market still exists but it would be much slower to build up. There is a caveat: the 146 would have to be priced competitively, and this is something on which the company has some doubts.
One cannot ignore the fact that inflation has already increased the cost of development. If the contract had gone ahead, the Government's contribution—originally £40 million in January 1972 prices— would have risen to some £54 million in September 1974 prices, which suggests that the project cost from now on would be at least £120 million at today's prices. Moreover, we cannot ignore the fact that the company's unilateral action has increased the costs. For example, contracts would have to be renegotiated, and there would be additional costs because of the disruption to the flow of work. It is questionable whether the subcontracts would now be renegotiated on identical terms. Moreover, the increase in costs has increased the level of sales needed to recover costs and, coupled with the slower growth of the market, has put back the break-even point considerably.
It has been suggested that the type of airline which is likely to buy the HS146 is on the whole less affected by the oil crisis and that this sector of the market is markedly more buoyant than, say, the market for transatlantic jets. It is true that the depressing effect on the market is not uniform and some sectors have been less hard hit than others. But many of the areas where the HS146 would have sold have been hit by the oil crisis. About 40 per cent. of potential sales would, according to our forecasts, have arisen in Asia-Oceania, and a further 15 per cent. or so in South and Central America. As we know, the economic future for such Third World areas is not at all encouraging. Equally, one hears it said that the oil-rich States will be a good


market for the plane, but these fall into our category of "Africa and the Middle East Sales", which might amount to only about 10 per cent. of the total.
I should add—contrary to the impression that my hon. Friend may have received—that we did approach British Airways to sound out their views about a possible launching order, but they told us that they were not in a position to give any commitment because the size and timing of any requirement they might have would be very imprecise, and could be quite a small number even up to the mid-1980s.
I should also mention another detailed input into our calculation of the project's viability. The degree to which the plane can penetrate markets depends on its sales price in comparison with the prices of its competitors. The F28 and the B737 are both in the fortunate position of having their development costs written off before the latest bout of inflation. They are in this respect in a markedly better position than the HS146, which will have to bear the full brunt of the development cost rises.
Taking all these uncertainties into account, the Government took the view that 100 per cent. funding would not be an appropriate use of resources. It is not so much that the money is not available but that it would be impossible to justify incurring considerable additional expenditure when the market has deteriorated in this way.
We also decided against building two prototypes. This possibility was also canvassed by my hon. Friend. This has been portrayed as a sort of "half-way house" but unfortunately it is no such thing. It would mean spending a considerable sum of money—at least £40 million—which would be abortive if the project were not then adopted and would add considerably to total costs, raising

them to £130 million, if it were. This is why prototypes are generally produced only when firm orders are obtained, as in the case of Concorde. I suggest that to do this for the HS146 would give us the worst of all worlds.
We therefore concluded that we should aim to keep the project in being in another way, by maintaining the design capability and vital equipment such as jigs, tools, and so on, so that its future can be reviewed and, if desirable, the project go ahead at a later stage. I have been asked when this review might take place. We want to let the new nationalised aircraft company make its own assessment of the prospects. We also want to allow enough time for the present difficult worldwide economic climate to settle down. I should have thought that we should therefore anticipate a review around the middle of 1976.
I know that my hon. Friend and other hon. Members are worried because they fear that delaying this long will mean that those working on other projects coming to the end of their production runs will not be able to transfer to HS146 work. I ought to deal with one aspect of this—the rundown of the Trident line. It has been suggested that work will begin to cease as from the next six to eight months on. I am informed that this should not be the case and that a reasonable forecast would be that Trident work can be expected to continue at approximately the current rate until at least early 1976 and, indeed, for longer if further orders are obtained.

The Question having been proposed after Ten o'clock on Thursday evening, and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at two minutes to Two o'clock.